From 1 April 2019, VAT-registered businesses with a taxable turnover above £85,000 will need to comply with Making Tax Digital (MTD).
If this is news to you, or if you haven’t finished preparing yet, you’re not alone.
A recent survey from the Federation of Small Businesses found that half of small firms are not ready to comply with the scheme, while research from HMRC indicates that 19% of firms have never heard of it.
HMRC has confirmed it will be taking a light-touch approach to handing out penalties in the first year of the scheme’s implementation, but this will only apply to businesses that are making their ‘best efforts to comply’, so it’s still important to prepare before the deadline.
If you’re not completely clear on the rules already, the most important step is to understand what MTD is, what the requirements are, and whether your business is included.
You can read our overview of MTD for VAT here, or talk to us if you have any questions.
Set up your software
If you’re keeping records on paper
Under the requirements of MTD, paper records will no longer be an acceptable form of record-keeping.
This means if you’re among the businesses included in the scheme, you’ll need to be set up on compatible accounting software before you sign up.
We can help you decide which software will be best for your business.
If you’re using spreadsheets
It will still be possible to use spreadsheets for the first year for the record-keeping aspects of MTD, but you need to be able to send and receive data from HMRC via a special bridging software, which connects the data in your spreadsheet with HMRC systems.
However, this is an interim measure which we do not recommend. Our experience shows that business have greatly benefited from using accounting software – not just for compliance purposes.
Whatever type of business you run, it’s worth kicking off with the right accounting software to suit your needs.
If you’re using accounting software
If you’re already using accounting software, you’ll need just to check that it’s compatible and ready for MTD.
Most should already be compatible, unless you’re using a very old version of any software. In this case, it’s likely you’ll need to upgrade or switch to a new product.
Sign up for MTD
We will be signing up clients with HMRC ahead of the deadline, so if we already submit VAT returns on your behalf you won’t need to take any action.
If you do your own bookkeeping and VAT submissions, you will need to sign up for MTD for VAT.
● your Government Gateway user ID and password
● the VAT number of the business you’re signing up for.
Talk to us
Don’t panic if you still have a long way to go before you’re MTD-ready. We can advise you on cloud accounting solutions and other options, as well as supporting you to migrate your data, and giving appropriate training on the software.
Contact us for help preparing your business for MTD.