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Are you ready for Making Tax Digital?

VAT IS GOING DIGITAL AND WE ARE HERE TO HELP


Making Tax Digital is a HMRC initiative with the purpose to take all tax submission online and to therefore enforce digital record holding via computer software. VAT registered businesses are the first to take part as of April 2019, with other forms of business tax following in 2020 and after. I have dug deep into this new initiative to make the transition easier for you. I have constructed a guide on how to get you through the change into MTD, hoping to take the weight off of your shoulders.



So, what is MTD?
MTD stands for Making Tax Digital, which in a nutshell is exactly what the name suggests. It means that by April 2019, businesses over the VAT registration threshold of £85,000 a year will be required to file all tax submissions through HMRC and MTD compliant software.

What will change?
Rather than sending the HMRC manually written data for Tax and VAT (most commonly on an excel spreadsheet), businesses over the threshold will now be required to use a software program or set of compatible software programs which can connect to the HMRC systems via an Application Programming Interface (API). This seems very confusing but it basically means that, businesses over the threshold will have to send their data to the HMRC using MTD compliant software. You can check with your accounting system provider on whether the software you are currently using is MTD compatible or not. For example; Sage have already confirmed that their software will be compliant with MTD regulations as there software program connects directly to the HMRC system via an API.

Who will it affect?
Any business over the VAT registration threshold of £85,000 must be MTD compliant by April 2019. Other businesses below the threshold can choose to opt in and can opt out whenever they want.

What happens if I ignore MTD?
Ignoring MTD could result in your business being fined. HMRC have brought out a new points based penalty system. The new penalty model will see the introduction of a system where a late submission of a return or filing obligation under MTD will result in a point. Once points have been accumulated up to a certain threshold this is where a penalty will be charged. The system will work much like the accumulation of driving offence points, where the points total will reset to zero after a period of good compliance.
As explained earlier, April 2019 will see the introduction of this legislation being put into action. A 12-month soft landing period will follow, before the new points system will commence in 2020

What software can I use?
Businesses will have to purchase 'MTD-functional software' in order to comply under MTD. HMRC won’t issue MTD software itself, as it has with Basic PAYE Tools. Free MTD software has never been promised in relation to VAT. 

THE GOOD NEWS!
Understandably, MTD and all this talk about  changes to VAT is probably causing you a HUGE headache. That's why at PM IT, we have undergone hours of detailed research. To take the weight off of your shoulders. We are authorised partners with Sage, the UK's leading accounting system provider who is trusted by over 400,000 businesses across the country and we can offer the installation and support for the software. Sage have already confirmed that they have developed a system called 'Sage Business Cloud Accounting' which is completely MTD compliant in addition to some other exciting new features. Contact us today via our contact us form on our website or call us today to find out more and how we can help you in the transition into MTD.
 



REMEMBER: YOU DON'T HAVE LONG!





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Are you ready for Making Tax Digital?

Are you ready for Making Tax Digital?

Making Tax Digital is a HMRC initiative with the purpose to take all tax submission online and to therefore enforce digital record holding via computer software.