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Making Tax Digital

Are you ready for digital tax?

Making Tax Digital for VAT begins on April 1st 2019. Sign up to our newsletter for monthly MTD updates or read on to learn what MTD is, when it's happening and what it will mean for you.

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Making Tax Digital Ready

"What is MTD and why is it happening?”
by Ian Fletcher & Nick Williams – 31s

What's Making Tax Digital?

VAT is changing. HMRC’s Making Tax Digital for VAT comes into effect from April 1st 2019 meaning many UK businesses must change how they prepare and file VAT returns. For those affected:

  • HMRC’s online VAT portal will close from April.
  • VAT returns must instead be submitted to HMRC through MTD software.
  • Businesses must digitally record their VAT transactions and returns using MTD software.

Useful guide to get ready for MTD today

Making Tax Digital for VAT Guide

After reading this FREE guide for small businesses you'll be able to:

  • Understand what Making Tax Digital is.
  • Know when Making Tax Digital for VAT starts and who it affects.
  • Get prepared quickly and easily.

Find out when Making Tax Digital affects you

April 2019

VAT (phase 1)

Who’s affected? VAT registered businesses with turnover above the VAT threshold (currently £85,000 excluding VAT).

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

April 2020

VAT (phase 2)

Who’s affected? The remaining VAT registered businesses – those voluntarily VAT registered with VAT-able turnover under £85,000.

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

April 2020+

Corporation tax & self-assessment

Who’s affected? Sole-traders, partnerships, landlords and trading companies. (The start date will be confirmed by the government following the successful roll out of Making Tax Digital for VAT.)

How? It's likely that:

  • MTD-compliant software or apps will have to be used to keep a digital record of financial transactions
  • MTD-compliant software or apps will have to be used to submit quarterly updates to HMRC for both income and corporation tax purposes

Frequently asked questions

  • When does Making Tax digital start?
    Making Tax Digital for VAT starts from 1st April 2019. Any VAT returns that begin on or after this date must follow the Making Tax Digital rules.
  • Who does Making Tax Digital for VAT impact?
    It impacts VAT registered businesses with a taxable turnover above the VAT threshold (currently £85,000) in the 12 months leading up to 1st April 2019 or any 12 month period thereafter.
  • Who is not impacted by Making Tax Digital for VAT?
    Making Tax Digital for VAT does not impact businesses who meet one or more of the following criteria:
    • Businesses who are exempt from online VAT submissions
    • Businesses who are not VAT registered
    • Businesses with a taxable turnover below the VAT threshold in the 12 months leading up to 1st April 2019 or any 12 month period (so long as they deregister from VAT).
  • How to comply with Making Tax Digital for VAT
    To comply with Making Tax Digital for VAT you will need to do all of the following by April 1st 2019:
    • Keep your VAT records digitally
    • Submit your VAT return to HMRC through MTD compliant software
    You must also do the following by April 1st 2020:
    • Digitally link software you use for VAT preparation and filing if you use more than one software solution.
  • My VAT returns are already submitted online, am I not already compliant?
    Unless your VAT returns are being submitted through software that has been approved by HMRC as being Making Tax Digital compliant then you are not already compliant. From 1st April 2019, the HMRC web page used by businesses and their accountants to submit VAT returns will be closed to those required to comply with Making Tax Digital.
  • Where do I get Making Tax Digital (MTD) software?
    A list is available on GOV.UK or you can try QuickBooks today. HMRC are not offering Making Tax Digital software.
  • How can my accountant help me with Making Tax Digital?
    Accountants can support you through Making Tax Digital so long as they have the following:
    • Permission from you to act as an agent on your behalf for VAT
    • Registered for an Agent Services Account and linked your HMRC account to it.
    • Access to Making Tax Digital compliant software.
  • Why is Making Tax Digital happening?
    Making Tax Digital is HMRC’s attempt to transform the UK tax system into one of the most digitally advanced in the world for the benefit of individual and business tax payers.There are four main benefits:
    • Digitalisation will improve the quality of record keeping.
    • Less manual entry should mean fewer errors.
    • Managing business affairs will become more efficient - especially if you adopt a cloud-based solution which can be accessed anywhere.
    • You’ll spend less time gathering and inputting data.
  • Why should I consider using QuickBooks as my Making Tax Digital for VAT software?
    As a QuickBooks user you’ll be MTD ready from day one and a customer of the worlds #1 provider of accounting software. By using QuickBooks you’ll be keeping digital records. You can also prepare and directly submit VAT returns to HMRC today and when Making Tax Digital arrives you will be compliant. For most businesses, QuickBooks is an all in one Making Tax Digital software solution without the need for digital links. If your business intends to take advantage of the Making Tax Digital soft landing period then QuickBooks can be used as bridging software to submit your VAT return data that has been prepared elsewhere.