If you’re a business owner in the UK, you will have heard Making Tax Digital (MTD). Under MTD you can no longer upload your tax return online through the HMRC gateway or by post. Instead, you need to keep digital records of your finances in MTD-compliant software that connects directly to HMRC.
HMRC aren’t providing their own software for MTD because it’s too big a job for just one developer to handle. Instead, HMRC are relying on a number of approved commercial software developers, like QuickBooks.
But what exactly makes software “MTD compliant”, and does your current tech comply with the rules? We’re here to help answer these questions.
What are the new MTD software rules?
From April 2019, all VAT-registered businesses (except those that are exempt) have to keep their financial records in a digital form and submit their VAT returns using approved software. To comply, your accounting software must do the following:
It must record your business details and all VAT-related transactions for up to six years.
It must include the date and any information about VAT paid or withheld for each transaction.
It must be able to calculate what VAT you owe based on your incomings and outgoings.
Crucially, it must submit your VAT return directly to HMRC via an API (application programming interface).
Why it’s time to ditch the spreadsheets
While you can continue to work with your own spreadsheets, you’ll need to have bridging software to connect it to HMRC via their API. It’s a way of making your system “talk” to HMRC’s system.
If you think that sounds complicated, consider migrating your bookkeeping to specialist accounting software that can handle and automate all the calculating, tracking and filing of your VAT all in one place, like QuickBooks.
The benefits of switching to accounting software
There are huge benefits to making the switch from spreadsheets to Making Tax Digital software. You’ll get these benefits straight away and be compliant with MTD.
More accurate accounting.
The software will do the sums for you, and by removing the likelihood of human error, you can also wave goodbye to HMRC fines for submitting inaccurate information.
Always know how your business is doing.
You’ll see all your incomings and outgoings in one place – and your information is accessible online or on your mobile at any time. You can make accurate projections and track your cash flow in a flash.
Because software like QuickBooks is so easy to use, you won’t waste hours of your time every month reconciling your accounts.
Never lose a receipt again.
Not great at keeping track of your expenses? Just take a picture of your receipts and store them in software like QuickBooks so they never get lost.
Simple invoicing tools.
Regularly work out of the office? Good financial software like QuickBooks lets you create and send digital invoices on the go. And you can track outstanding invoices and even send personalised reminders to your clients if you need to.
On top of the other benefits there’s a whole area in QuickBooks dedicated to your employees, so keeping up with payroll won’t be a headache.
How will QuickBooks help me?
Intuit QuickBooks features on HMRC’s list of Making Tax Digital companies providing software. If you’re on QuickBooks, MTD will not be an issue for you.
Whether you’re a small business owner, an accountant or bookkeeper, we’re on hand with useful information about MTD. With award-winning support which includes phone advice, web chat and online resources, we have everything you need to make sure you’re MTD compliant.
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