TT287: Are you ready for making Tax digital (MTD) on 1 April
From 1 April 2019 all businesses with taxable turnover above the VAT registration threshold (currently £85,000) must keep business records in digital form and file VAT returns using MTD compatible software.
MTD will apply from the first VAT return period commencing after 31 March 2019. Therefore, if your return period is from 1 February to 30 April your first MTD return will be for the period commencing 1 May 2019.
Under MTD business records must be kept in digital form using functional compatible software. Functional compatible software will enable records to be kept and information to be filed with HMRC using a digital API platform. The essence of MTD is that VAT returns can be submitted to HMRC with no human input once the initial source document has been entered into the accounting system.
Is my system compliant?
If your software is provided by any of the major software suppliers then you may be compliant. If you are currently using an online browser-based provider (e.g. Sage one, Quickbooks online or Xero) then all these providers should be rolling out their MTD compliance module.
If you currently use a desktop version of the same providers (e.g. Sage 50, QuickBooks Desktop) then you will need to ensure you are on a compliant version. This means subscribing to a licence to acquire the latest software version, but may vary depending on the provider.
If your software is not compliant then it is possible to acquire bridging software which enables information to be transmitted digitally between your accounting software and HMRC.
Software suppliers that should be compliant are listed by the government here:-
If you use spreadsheets in order to transfer information used in your VAT return then it is important that information is transferred by digital links. This means that any information transfer between spreadsheets has to be done by a formula within the spreadsheets. A “cut-and-paste” is not a digital link.
Compliant software must be used for the first MTD period. However, HMRC recognise that businesses that use more than one software/spreadsheet system may not have every digital link in place immediately. Therefore businesses are given a 12 month period, in most cases commencing the first VAT period after 1 April 2020, to become fully compliant.
If you’ve not already done so you should check with your supplier that your software is compliant for MTD.Talk to Barnes Roffe today