Making Tax Digital (MTD) is an initiative from HM Revenue & Customs to modernise HMRC’s tax system, and it is the biggest change for you and us in the way we deal with bookkeeping, accounts and tax returns for over 20 years.  It aims to make the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. You can upload and update your tax account in real time.

Please use these pages to keep informed of the developments for MTD as they progress, and the support we will be offering clients within our services.  These pages will be continually updated so please keep an eye on them.

Making Tax Digital for VAT From 1st April 2019

HMRC has taken a major step forward in their ambition to make tax digital with the introduction of Making Tax Digital for VAT.

If you are a VAT-registered business where your taxable turnover exceeded £85,000 over the last 12 months you will have to keep digital records of your accounts from your first VAT quarter that begins on or after 1 April 2019.   “Digital” excludes manual books and records.   If you haven’t already done so, please contact us today to help you get ready for this significant change in VAT accounting and reporting.

Timeline for MTD

After MTD for VAT has been implemented from 1st April 2019, MTD for income tax (for the self-employed and those with income from property) and MTD for corporation tax are expected to follow, but not before April 2020 at the earliest.

Will it affect me?

If you own a business, you are self-employed and you pay income tax, national insurance, VAT or corporation tax then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD compatible software, and to update HMRC at least quarterly via your digital tax account.  By filing quarterly information and keeping digital records, HMRC believe it will reduce errors, streamline administration and speed up payment of taxes with “voluntary pay as you go”. Eventually this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance. 

This means that you will have to change the way you keep your books from (desktop, manual, spreadsheet, etc.) to a Cloud accounting package or use a form of Bridging software.  See our Further Help page for more information on software and bridging software.

Some businesses will have their start date deferred – deferred clients will include:  trusts, not for profit organisations not set up as a company (this will include some charities); you submit annual returns; a local authority; a public corporation, makes payments on account or uses the VAT GIANT service.   If you are in the deferred group, you must follow the rules for MTD from your first VAT Return period starting on or after 1 October 2019.    Businesses in this group should have had a letter confirming the fact from HMRC.    If you are in the deferral group and have not received a letter from HMRC, please ring the VAT Helpline on 0300 200 370.

Businesses with a taxable turnover below the VAT threshold can also sign up for MTD for VAT voluntarily.  

What do I have to do?

You will need to open and log into your digital account. Everyone will be allocated one through the current Government Gateway.  Before you sign up, you must have software that lets you submit VAT Returns and is compatible with Making Tax Digital for VAT.  You’ll then receive an email within 72 hours to confirm that you can submit returns using software that’s compatible with Making Tax Digital for VAT.   After you’ve signed up, you cannot use VAT online services to send VAT Returns.  Before you can send VAT returns, you’ll need to authorise your software.

We can advise you on the software you will need and how to comply with the new quarterly reporting requirements - you can also visit our Further Help page.

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