The much talked about MTD went live on 1 April 2019. In case you have been living in a bubble and don’t know what MTD stands for, it’s Making Tax Digital. This is an HMRC initiative to digitalise record keeping and mandate the submission of information to them through digitally enabled software/links. Initially this affects the submission of VAT returns.
Up until 31 March 2019, HMRC were running a pilot and only a small number of businesses had signed up to this. MTD is now live and businesses with taxable turnover over the VAT threshold of £85,000 have to sign up to MTD and submit their monthly or quarterly VAT returns through a digital link or through digitally enabled software. More can be found about the full detail of MTD on our website, www.albertgoodman.co.uk, for those who have been in that bubble!
If you are caught by the new rules but aren’t ready, the first thing you need to do is establish from what date you need to comply. I have set out below the dates based on the different VAT quarters:
WHAT DO YOU NEED TO DO AND HOW CAN WE HELP?
Having established when you need to file by, you then need to consider if the way you currently keep your books will work for MTD. There are a number of different ways you could be doing this, which I have covered below:
• If you are using software and this has been upgraded to be MTD compliant, you will be fine. Most cloud-based accounting packages are compliant, such as Xero and QuickBooks Online. SAGE desktop can be upgraded to be compliant. Whatever software you are using, if the company have not already been in touch, you will need to contact your provider and find out if the version of software you are using is compliant or if an upgrade is required.
• If you are using software and this won’t be upgraded to be compatible for MTD, you will need to change to something that will be or you may be able to use something called Bridging Software.
• If you keep your records on spreadsheets, you may be able to use Bridging Software.
• If you write up your records manually, you will almost certainly have to change.
At Albert Goodman, we have partnered with a number of software providers and are able to help and advise on any changes you need to make. If you don’t fancy taking this on yourself, we also offer a bespoke outsourcing service, which involves us keeping your books for you. We do this using Xero cloud accounting software, which is fully compliant for MTD. As part of this service, we can also prepare monthly or quarterly management accounts so that you can get up to date figures for your business on a more regular basis.
Once you have a compliant system in place, you then need to sign up for MTD with HMRC, this doesn’t happen automatically. It has to be done through your government gateway login. The platform is constantly changing, but at the time of writing, when you go in to submit a VAT return, you will see the following message:
As you can see if you are required to file through MTD and don’t your return may not be logged as received, which will cause problems. HMRC have indicated that there will be a soft landing system with regard to penalties for MTD.
If you aren’t ready for MTD or would like further guidance on what you need to do, please contact us.