Today, 1st April 2019, is MTD day. Making Tax Digital is now live for VAT!
If you have a turnover of £85k+ and you’re wondering what MTD is, it’d probably be a good idea to read on…
What is Making Tax Digital (MTD)?
Making Tax Digital or ‘MTD’ is new legislation from HMRC which is being introduced to the UK tax system, in a bid to move tax submissions and accounting records online.
As of 1st April 2019, most VAT registered businesses need to:
- Use software or a spreadsheet to keep accounting records (including self-employed, partnerships and limited companies) instead of paper records. Paper accounting records will no longer meet the requirements of tax law after this date.
- VAT returns and income tax updates (quarterly & annually) must be submitted to HMRC directly from software.
When is the Making Tax Digital (MTD) deadline?
Making Tax Digital (MTD) currently applies only to VAT; digital VAT returns now need to be submitted. The frequency of the returns will remain unchanged and there will be no changes to the reporting periods; only the way in which information is stored and how and VAT returns are submitted.
How does Making Tax Digital (MTD) affect you?
If your turnover is above the VAT threshold, your business must be registered for VAT as normal and you will be required to keep and retain digital accounting records. You also need to file your VAT returns using MTD compliant software.
Even if you always use accounting software, you may need to upgrade or change it to ensure that the requirements are met. If you keep your records on a spreadsheet(s), you will need to purchase software which allows returns and updates to be made directly from your spreadsheet(s).
If you are using paper records, you will need to move on to a different system and your processes will need to change in order to remain compliant.
MTD Compliant Systems
There are a range of different accounting software packages available to you which can help you become MTD compliant, including:
HMRC has a full list of MTD-complant software available here: https://www.tax.service.gov.uk/making-tax-digital-software
We understand that this change may be daunting, but we are here to help you and discuss the options available to you.
What are the next steps?
Making Tax Digital (MTD) is currently only applicable to VAT, but there are plans for MTD to become mandatory for income tax reporting from 2020 and will need to be implemented by all self-employed individuals, partnerships trusts and landlords who complete self-assessment tax returns.
The deadlines are yet to be set but it is has been confirmed that this will not come into play until April 2020 at the earliest.
If you are VAT registered but not yet MTD-compliant – or if you have any questions about Making Tax Digital – please get in touch with Ascendis today.