WHAT’S HAPPENING IN APRIL 2019?
From 1st April 2019, businesses which are registered for VAT and that have a VAT taxable turnover of over £85,000 per annum must complete and keep digital VAT records. This will require you to have an MTD-compatible service or software in place in order to comply with digital tax recordkeeping.
If your business has vatable turnover below the VAT threshold of £85,000 you will not have to complete digital recordkeeping from this date, but you can choose to do so voluntarily.
You will also need to file your quarterly VAT Returns via your accountant or using software that is compatible with MTD
WHAT VAT RECORDS WILL NEED TO BE KEPT DIGITALLY
There are specific records that must be kept digitally in MTD-friendly software:
- Your business name
- The address of your business
- Your business’s VAT registration number
- VAT invoice information (invoice date or date of supply; net invoice amounts and VAT rate charged)
- VAT records for supplies and services received
- Managing the VAT processes of your business can quickly get very complicated and time consuming, so hiring an accountant can help overcome these issues.
- To prepare for MTD it’s prudent to start keeping your records digitally in advance of 1 April 2019 if your business will be required to comply.
HOW WILL DEVONSHIRE GREEN PREPARE FOR MAKING TAX DIGITAL
Our accounting systems fulfil the MTD filing criteria and obligations, so all of our clients have peace of mind that their businesses will be compliant with MTD for both VAT and Income Tax in advance of future deadlines.
WHAT ELSE IS CHANGING FOR MTD
Looking further into the future, the biggest change for businesses will be when Making Tax Digital covers Income Tax and National Insurance Contributions (NICs). HMRC is looking to implement the requirement for businesses and individual taxpayers to record their income and expenses in MTD compliant software, or use an accountant who is MTD compliant. It will also require you to send quarterly income tax updates to HMRC, and send a final report at the end of your business’s accounting period to confirm the year’s income and expenses.
According to tax.org.uk: “The Government have stated that they will not widen the scope of MTD beyond VAT before the system has been shown to work”. Rather than anything to be concerned about, this element of MTD will just mean more regular business reporting to HMRC as opposed to just filing one set of annual accounts.
At Devonshire Green, we believe that having worked with HMRC on testing and implementation of Making Tax Digital software, we are perfectly placed to ensure our clients are MTD compliant in the medium and longer term as the changes are rolled out.