Making Tax Digital

In this section we have summarised what Making Tax Digital means for VAT registered businesses and have included links to further resources from our team.

Making Tax Digital is probably the UK’s biggest tax shake-up in a generation. If you file a VAT return, you’ll soon need to do it in a Making Tax Digital compliant way.

That is because from 1 April 2019 HMRC is moving towards a fully digital based tax system, though you will need to make sure you are ready to go digital ahead of the deadline.

The countdown to Making Tax Digital…

Making Tax Digital will come into force from 1 April 2019 for all VAT registered businesses (sole traders, companies, partnerships and LLPs), which means you have the following time to ensure you are ready:

What does Making Tax Digital mean for my business?

Essentially, from 1 April 2019 VAT registered businesses will no longer be able to send their VAT information to HMRC via HMRC’s online portal.

Under the new rules, all VAT registered businesses will be required to submit their VAT return digitally using compliant software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  1. Maintain digital records – Businesses will need to use compliant software to maintain their digital records. This means that transactional data (such as the time and value of each supply and the applicable VAT rate) will need to be stored digitally.
  2. Have digital links to records – VAT returns must be linked to digital records. HMRC has announced a soft landing period of 12 months for this, however this is very likely to become enforced in the future and we recommend that you prepare now for this.
  3. Submit VAT information – At present, most businesses submit their VAT returns through manually inputting them into HMRC’s online portal. From April 2019 this portal will close for VAT registered businesses and you will no longer be able to submit VAT returns this way. Instead, all submissions must be made digitally via HMRC’s Making Tax Digital application programming interface (API). Please note, that if your taxable turnover is less than £85,000 and you are voluntary VAT registered, you will still be able to use the HMRC online portal as you currently do.

How to comply

If you are not using compatible software, or using an outdated version or unsupported software you should review upgrading or changing provider. As well as becoming compliant with Making Tax Digital, this may also be a good opportunity to move to an accounting solution that brings improved efficiencies and gives you a better understanding of how the business is performing throughout the year.

However, if you wish to continue to hold your records on a spreadsheet, our team has access to a cost-effective bridging software that we can set up for you, meaning there are minimal changes to how you operate.

How we can help you

Our team are ready to help ensure that you are able to comply with Making Tax Digital.

As certified and experienced Xero, QuickBooks and Sage users, we can advise and help you set up and integrate these popular systems. In some cases we can secure preferential rates than going direct to these software providers.

We can also assist with selected and setting up bridging software if this is required.

If you would like to discuss how we can assist please contact our team to discuss this further.

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