From 1 April 2019, VAT registered businesses with turnover above the VAT registration threshold (currently £85,000) will be required to keep digital records and submit their VAT returns via the Making Tax Digital system (MTD). VAT registered businesses with turnover below the registration threshold will not be required to use the system, however, they can choose to do so voluntarily.
MTD is the government’s flagship scheme that requires online tax filing and payment, as well as digital record keeping. All business taxes will be part of the scheme, but only VAT currently has an actual rollout date, with the rest following in 2020 at the earliest.
MTD introduces new VAT recordkeeping rules and the requirement that all applicable VAT return data is ‘digitally linked’ so that transactions can be traced from source data (ie purchase/sales ledger) through to VAT return completion and upload to HMRC. While MTD will change the manner in which VAT returns are submitted, it will not alter the deadlines or the frequency of VAT return filings.
So, are you ready for Making Tax Digital? Which category do you currently fall into and what are your next steps…
I keep manual records
Handwritten or records maintained on spreadsheets will no longer be permitted. You will need to start using accounting software to ensure your business is ready for MTD before the April 2019 deadline.
This is a good opportunity to select the right software for your business which if done correctly will bring positives such as time savings and accurate real-time information rather than extra administrative burdens.
I use old software
Records are kept on bookkeeping software, but not the latest version. If your software is more than one year old and no monthly/annual subscriptions are in place, it is not MTD ready and will need upgrading. You will no longer be able to submit your VAT return from April 2019.
The simple option would be to upgrade to your software providers latest version, but you should check it will be MTD ready. Or this may be a good opportunity to change your software provider to your business needs or consider the switch to cloud accounting.
I am already using MTD ready software
Records are kept on the latest version of your desktop software or you subscribe to a cloud accounting provider.
You are all ready for MTD! From April 2019, your provider will enable the submission of a VAT return via the software ensuring you and your business are MTD compliant.
In summary, if you are VAT registered and over the registration threshold, you need to ensure you are ready for MTD when it comes into force from 1 April 2019. Whatever your situation we would advise you contact your professional advisor to ensure you are ready for MTD for VAT.
George Beckwith – Barrons