What is Making Tax Digital for VAT?
Making Tax Digital (MTD) for VAT is the first step in a government initiative that will eventually move virtually all tax and National Insurance Contribution management and payments online. That is, it mandates digital record keeping and automated filing for these business processes.
What does it mean for my business?
If you are a VAT-registered business with a taxable turnover exceeding the VAT registration threshold (currently £85,000) you will need to keep digital records for VAT purposes and provide your VAT return information to HMRC through MTD compatible software from 1 April 2019.
How do I prepare?
Determine how and when the legislation will impact your business
- When is your first VAT return period under the new legislation? Is this part-way through a financial year?
Review your current accounting system
- Is it MTD compliant?
Consider your options
- Cloud accounting software can help you meet the legislative requirements of MTD.
Assess your accounting support
- Here at UHY Torgersens we have staff who are certified in the use of software from providers listed by HMRC as being amongst those who are supporting Making Tax Digital.
What if my turnover is below the VAT threshold?
If you are not affected by the legislative change coming into effect on 1 April 2019, do not make the mistake of thinking that MTD has passed you by.
The Government intends to make the UK tax administration system the most technologically advanced in the world and, given that our tax system is one of the world’s most complex, this is no mean ambition.
Businesses will be asked to keep digital records or update HMRC quarterly for taxes (other than VAT) from April 2020 at the earliest.
Voluntary submissions for income tax will be accepted prior to April 2020.
There are some exemptions from MTD. Further details about these can be found on the gov.uk website.
Rather than view this new legislation as a compliance burden, here at UHY Torgersens we encourage our clients to see MTD as an opportunity to embrace the new digital technology available and all of the benefits it brings.
Making Tax Digital is coming. Make sure you are ready for it.
As one of the leading firms of accountants in the North East, with offices in Newcastle, Sunderland and Jarrow, we have the expertise to advise you on everything to do with Making Tax Digital. If you would like to speak to one of our local experts, please contact us.