All VAT registered businesses with annual taxable turnover exceeding £85,000 must comply with the making tax digital (MTD) rules for VAT periods beginning on and after 1 April 2019. However, a few businesses have been deferred until the period that begins on or after 1 October 2019. If you are in the latter group you should have received a letter from HMRC explaining this.
There are two requirements for MTD: to keep your VAT records in a digital format and to submit VAT returns using MTD compatible software. This is neither as complicated nor as difficult as it first seems; if you already record transactions on a spreadsheet or some form of accounting software you are already meeting the first MTD requirement.
If you currently use a spreadsheet based system you will need to buy some new MTD software to read the relevant VAT totals from the spreadsheet and submit them to HMRC as your VAT return. This type of bridging software is not expensive.
Your VAT software does not have to be cloud based and you do not need to keep your entire VAT accounting system on one software program. As long as there are digital links between different pieces of software or spreadsheets, your VAT accounting system can be made up of several software elements.
Do not be bamboozled into upgrading to the latest version of your accounting software to allow you to submit VAT returns under MTD. Most accounting packages allow you to download the data into a spreadsheet format (CSV) which can be read by bridging software in order to submit the VAT return.
We can help you choose the most appropriate MTD software for your business. There are around 100 MTD compliant products already on the market and another 200 in development, so there is plenty of choice.
Would you like help and advice on this or any other issue?
Contact us straight away by telephoning 01932 564098 or email us using our ‘Contact Us’ page.
This note was published from our Spring 2019 Tax Briefing dated March 2019
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.