MTD is an abbreviation of Making Tax Digital. Well, it’s an overhaul of the UK tax system which replaces manual processes with digital ones. In simple words, HM Revenue & Customs wants small businesses to be more organized, therefore, from 1st April 2019 HMRC will expect you to keep all of your records digitally. There are many businesses in the UK that are using, but at least half of the businesses in the UK still use spreadsheets.
Under Making Tax Digital VAT known as ‘Making VAT Digital’ (MVD), most VATs registered businesses are required to use ‘functional compatible’ software in order to record their transactions and report their VAT.
With Making Tax Digital VAT around the corner we have decided to demystify some of the most common misconceptions surrounding MTD in our myth-buster infographic below.
1. To keep digital records
2. To use functional compatible software
3. To submit VAT returns via your software to HMRC.
Digital records: what are digital records?
· Digital records must be kept on functionally compatible software.
· Digital records must record the following details:
· Digital records must be retained within functional compatible software for up to 6 years and for up to 6 years following deregistration.
Making Tax Digital (MTD) – Spring Statement 2019
Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April 2019. This is an important first step in this modernization of the tax system to which the government remains committed. In the WMS, the Chancellor confirmed the government’s ‘light-touch approach to penalties in the first year of implementation’. Where businesses are doing their best to comply, no filing or record-keeping penalties will be issued. The focus will be on supporting businesses to transition and the government will therefore not be mandating MTD for any new taxes or businesses in 2020.
We highly recommend using online software to make sure you are compliant with HMRC making tax digital, but should you wish not to use at this stage we have the ability to file VAT returns through commercial bridging software for now. Please visit our website to find out a bit more about Making Tax Digital.
Should you have any questions or need further information, please do not hesitate to contact us on 0203 4411 258 or [email protected].