Making Tax Digital facts and myths
Making Tax Digital comes into force for VAT registered businesses with turnover of £85k or higher, on 1 April 2019.
Are you confused by all the conflicting information out there? To help you prepare, we outline below the facts and bust open the most common myths surrounding Making Tax Digital.
Facts about Making Tax Digital
Making Tax Digital (MTD) is undoubtedly the biggest change to the administration of tax since the introduction of PAYE in the first half of the last century. The Government has revised its timetable for MTD several times since it was first presented and under the latest plans:
- VAT registered businesses with taxable turnover above the VAT registration threshold (£85,000) will have to keep digital records from 1 April 2019;
- For income tax reporting obligations, the self-employed and landlords will not be asked to keep digital records or to update HMRC quarterly, until at least April 2020;
- Similarly, for corporation tax reporting obligations, implementation will not be until at least April 2020.
Making Tax Digital for VAT
For VAT return periods commencing on or after 1 April 2019, affected businesses will no longer be able to submit their VAT returns through the government gateway. Businesses will be required to use MTD-compatible software which prepares a VAT return and sends it to HMRC. To be MTD-compatible, the software must integrate with HMRC systems to send VAT returns to HMRC, what is known as API-enabled software.
How do I get my VAT-Registered Business Ready?
If the business is already using cloud-based, API-enabled software that appears on HMRC’s approved list, and you perform no adjustments to VAT outside of your bookkeeping system, you will already be MTD for VAT compliant and will not need to take any further action.
If, however, your business is using desktop software, bespoke software, software that is not listed on HMRC’s approved list, excel spreadsheets, a combination of software and excel spreadsheets, or indeed are still maintaining records manually, these options are not compatible with MTD as the business will not be able to submit its VAT return digitally. There are various solutions to these problems and you should speak to us, who will be able to recommend the most suitable move forward.
If your current software supplier does not appear on HMRC’s approved list, we strongly urge you to get in touch with them and request an update on whether they plan to be compliant by April 2019. If the answer is no, you should seek urgent advice from us on the options available to you in order to make digital submissions of VAT returns from April 2019.
Myths about Making Tax Digital