Are you Making Tax Digital (MTD) ready?
1st November 2018 by Carl Page
After what seems like a very long lead time, since its original announcement by George Osborne at the 2015 Budget, Making Tax Digital (MTD) for VAT is now only a matter of months away.
From April 2019, all VAT registered businesses whether companies or unincorporated, with a turnover above the VAT threshold will be required to be MTD compliant.
What are the basic requirements?
Qualifying businesses will be required to keep accounting records “digitally” using computer software that will be able to communicate directly with HMRC’s systems via an “API link”. VAT returns will be filed directly to HMRC via “digital software”, rather than using HMRC’s online gateway.
What do I need to do now?
In preparation for April 2019, businesses will need to ensure that their accounting software will be MTD compliant.
If you are already using accounting software (whether online or on-premise) such as Sage, Quickbooks, Farmplan, Xero etc then it is very likely that you will be MTD compliant, so long as you are using the latest version.
It has recently been confirmed that spreadsheets, such as Excel, will be treated as a form of digital record keeping, however they will need additional software to communicate with HMRC. Such bridging software is now becoming commercially available, but it remains to be seen at what cost. You could therefore decide to stick with spreadsheets for the time being but it is likely that in future the use of spreadsheets will become more and more restrictive, especially when MTD for income tax / corporation tax comes on stream.
There can also be many benefits in terms of efficiency, reporting etc in moving to a full accounting package, so if you currently use spreadsheets to maintain your business records you may therefore still wish to consider changing to compliant dedicated accounting software.
Those businesses using manual records unfortunately will definitely not meet the criteria of digital record keeping for the purposes of MTD and need to be planning now for migration to a suitable alternative ready for April 2019.
If you currently outsource your bookkeeping it is important that you confirm that the firm is not only storing your records digitally but also will have the facility to submit the returns digitally to HMRC.
How can Ensors help?
Through our Ensors.digital accounting software service we can help you choose the right accounting package for you. We will help to get it set up in the right way to maximise efficiency and explain how to use it. Alternatively, we can just help to upgrade your existing software to the latest version allowing MTD filing.
If you wish to outsource we can take on your full bookkeeping and VAT return completion tasks, filing the VAT returns to HMRC on your behalf.
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