For most businesses, the deadline for Making Tax Digital (“MTD”) for VAT is only a few weeks away. If you have not already done so, NOW is the time to check whether this applies to your business and, if so, whether your software is compliant.
As a reminder, from 1 April 2019, VAT registered businesses with taxable turnover exceeding the VAT threshold of £85,000 will be required to keep digital VAT records and submit VAT returns using MTD software. The exact start date depends on the VAT quarter end, as follows:
– Mar/June/Sep/Dec – Quarter ended 30 June 2019
– Jan/Apr/Jul/Oct – Quarter ended 30 July 2019
– Feb/May/Aug/Nov – Quarter ended 31 August 2019
The requirements do not apply to VAT registered businesses with taxable turnover below the VAT threshold, such as those that are voluntarily registered, although they can still sign up to MTD if they wish.
Some businesses with more complex VAT affairs have had the start date deferred until 1 October 2019. These include VAT groups, VAT divisions, trusts, ‘not for profit’ organisations which are not companies, certain public sector entities, trade based overseas, those required to make payments on account and annual accounting scheme users.
Many businesses are using the introduction of MTD for VAT to either upgrade or change accounting software, to a cloud based package. Online packages have improved significantly over recent years, often reducing bookkeeping costs whilst also improving management information available to the business owner. HMRC have published a list of compatible software. If the software used by a business isn’t compatible or spreadsheets are used, bridging software may be required to make the records MTD compatible.
If you’d like to discuss MTD, general tax compliance or other ways just to streamline management information and processes in your finance function, please get in touch with any one of our team.