Making Tax Digital (MTD)
COMING SOON…
The Government remains committed to the start of the roll out of Making Tax Digital (MTD) in April 2019 and the legislation to implement the changes has been passed.
In the past few weeks more information has been released by HMRC in order to give us a better understanding of what will be required in practice as until now we have been somewhat in the dark.
Only this week we have received a letter from HMRC regarding our own VAT registration advising us that Making Tax Digital for VAT will be starting rom 1st April – thus giving us 4 months to prepare. No doubt your own letters will be arriving shortly.
Despite a recent report from the House of Lords calling for the introduction to be delayed, as businesses are not ready, HMRC still plan to press ahead with it.
What does this mean to your business?
Initially the Making Tax Digital legislation applies to all VAT registered businesses with turnover above the VAT registration threshold (currently £85,000). These businesses are required to submit their VAT returns in a digital format. In future years, possibly as soon as 2020, it is likely to apply to all businesses and it will also apply not just to VAT submissions but also quarterly income tax (accounts) information will be required to be submitted. Further information regarding this will be released in due course.
You will need to ensure that your accounting records are “digital” and, starting from the first VAT period that commences on or after 1st April 2019, keep and file your VAT accounting records digitally. “Digital” excludes manual books and records.
The government initially indicated that the cost to businesses of implementing this would be minimal. The accounting profession however strongly disagreed with this and challenged the government to drop the idea as it would be another added burden to business following on from RTI and Auto Enrolment – the government sadly did not agree. There is unfortunately going to be some cost, the amount being dependent upon the level of help and support required by each individual client.
Many of our clients are already using computer software for their bookkeeping and these businesses should not be impacted significantly, other than having to upgrade their software to be digitally compliant. Other businesses however are going to have to undergo significant changes.
Even if you are only required to upgrade your existing software in order to be compliant it may still be worth talking to us as we have links with various software providers and may be able to obtain a better deal for you than you dealing directly with them.
We have access to various Digital Accounting software packages many of which are Cloud based which allow access from anywhere provided you have an internet connection – they also enable ourselves, with your permission, to have access to your data and be able to assist you with most issues without the need for a face to face meeting. We will, where required, assist you in establishing the most cost effective way in becoming compliant and offer training and ongoing support through what is another major change to business management.
Trying to put a more positive note on all of this you may actually find that there are some benefits to changing the way you keep your records.
A number of the new Cloud Accounting packages can allow you to:
• Capture receipts and payments from your bank account directly;
• Use your smart phone to photograph expenses and have them filed straight into your accounts;
• See your results 24/7 via an app on your phone;
• Create quotes and sales invoices easily; and
• You should have more up to date management accounting information.
Need to know more about MTD?
We offer a free initial chat, so there’s no charge or obligation. To arrange simply call our friendly team on 01782 566101. You can also email Contact@SlatersAccountants.co.uk to get in touch.
