As part of the government’s initiative to make the UK’s tax system “fit for the 21st Century”, Making Tax Digital (MTD) will see all businesses submitting all of their tax and VAT information to HM Revenue & Customs quarterly using MTD-compliant software.
While the start date for the Income and Corporation Tax reporting is yet to be confirmed, the first stage of this MTD for VAT will kick off on 1st April 2019.
Experts at Whitley Stimpson, one of the largest independent accountancy practices in the area, are keen to tackle some of the myths around MTD and want to ensure that businesses are aware of the forthcoming changes, and how their business may be affected.
John Skinner, a senior manager at the Banbury office says: “MTD will affect all VAT registered businesses with an annual turnover above the VAT threshold (currently £85,000 per annum). These companies will need to submit their VAT returns digitally and report in a different way.”
Companies are required to sign up for MTD, then maintain ‘digital records’ by using accounting software or spreadsheets. They must then submit VAT returns via HMRC’s new platform using ‘compatible software’. Businesses have to start following these requirements for their first VAT return that starts on or after the 1st April 2019.
However, it’s a myth that businesses mustuse accounting software like Sage and Quickbooks for MTD. A viable alternative is to use a spreadsheet along with “bridging software” that can create a link to HMRC’s new submissions platform. Equally, businesses can continue to use their existing software, even if it isn’t cloud-based, by exporting into a spreadsheet. And finally, if a quarter end date suits a business cycle, the end dates do not have to change simply because of MTD.
John continues: “VAT circumstances are unique to every organisation. Whether it’s deciding when to sign up, submitting a first MTD VAT return and how to do it, or simply deciding to follow the requirements of MTD if businesses are registered for VAT voluntarily, it will mean a large change and it is important to get it right.”
If businesses remain unsure about their options or obligations under MTD for VAT, Whitley Stimpson has a team of hugely experienced and highly qualified specialists with offices in Banbury, Bicester, High Wycombe and Witney, who can advise on all MTD matters.