The HMRC’s digitalisation of tax information – known as Making Tax Digital (or MTD for short) – is rapidly approaching. From April 2019, all businesses with taxable turnover above the VAT registration threshold of £85,000 must keep digital records and submit VAT returns using MTD compatible software through the HMRC Gateway.
In practical terms, this means:-
- For VAT, submitting VAT returns to HMRC through MTD compatible software. This will be mandatory for those above the VAT threshold from April 2019, but those below the threshold can join too.
- For income tax, providing summary updates of income and expenses on a quarterly basis and finalising your end of year position through MTD compatible software.
Details of MTD compatible software products are available on HERE Whilst the more well-known software are included e.g. Sage Cloud, Xero and Quickbooks, there are over 80 other HMRC-approved suppliers and another 100 who are currently looking to develop approved software.
If you are required to join MTD for VAT from April 2019 and are not yet keeping your business records digitally, you will need to think about how to start the transition to digital records, and the help and support you may need. Even if you aren’t required to join MTD yet, many organisations are starting to migrate onto digital record keeping in readiness for the future.
MTD does provide you with benefits. It should provide a more straightforward and streamlined way of keeping records and providing tax information to HMRC. And following on from this it should allow you to monitor your own cash flow and P&L in a more consistent manner – if you aren’t already!
Importantly, if you haven’t already heard from your accountant, contact them asap to ensure that your organisation is ready to Make Tax Digital.