In October 2018 HMRC made the first step in their changes to the UK tax system, opening pilot schemes for voluntary use of the new Making Tax Digital platform. From April 2019 companies that have a turnover above the VAT registration threshold will need to keep VAT records on approved digital systems, and file their VAT returns via that software.
MTD
The HMRC published a notice to provide information to customers, specifying why will need to use MTD (Making Tax Digital) what records they need to keep and how digital software needs to be used for the storage and transmission of your VAT returns or to send your Income Tax updates.
The HMRC keep a list of compatible software for VAT returns, Income Tax updates and software that agents can use. If the software you use is not on the list, you’ll need to move to one that is, or appoint an agent who uses an appropriate product to act on your behalf.
Accountants & Agents
If you use an accountant or an agent to manage your VAT returns, you should make sure they are giving you the correct advice and are able to support the most appropriate software for your company to fulfill the MTD requirements. If your agent or accountant has not already got plans in place to make sure the software they are using is compliant, it may be an idea to start looking for a more informed service.
Spreadsheets & boxes of invoices
The use of spreadsheets, paper and similar bespoke means to record transactions is not necessarily prohibited, but you will still have to be able to move that information (individually, not summeriesd) into a MTD compatible product for storage and transmission to the HMRC.
The information that needs to be stored digitally are:
- Name and address of the organization’s principal place of business
- The VAT registration number
- Details of any VAT schemes used
- Time of supply
- Value of supply (including VAT that is not claimable by the business for supplies received)
- Rate of VAT charged (for supplies made)
- Amount of TAX to be claimed (for supplies received)
Deferred MTD
Some very specific situations might have a deferral to the beginning of MTD until October 2019, these are typically more complicated setups such as overseas traders, VAT groups and some charities.
MTD for VAT
The next step for MTD will be on VAT, with the public testing started in October 2018. Agents and businesses can sign up for MTD for VAT on the pilot page (For sole trader or LTD’s & for agents)
MTD for Income Tax & Corporation Tax
After MTD for VAT is implemented, HMRC will be extending the scheme to MTD for Income Tax and Corporation Tax, expected in April 2020. More details for this timeline will be available in 2019
#WeCanHelp
We can help you prepare for MTD, if your a business or an agent, we can check your systems and implement a MTD ready system making sure you avoid filing fines when MTD becomes mandatory.
Contact us immediately for more information on the services we offer.
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