LondonSt Albans

READY FOR MAKING TAX DIGITAL?

Making Tax Digital (MTD) – A guide to help you get ready

With only four months to go before Making Tax Digital becomes a legal requirement, HMRC statistics and reports show many businesses are still not aware of the requirements to be compliant for Making Tax Digital (MTD) for VAT.

If you have a VAT registered business (with taxable turnover above the VAT threshold (£85,000)) then MTD must be in place for the first VAT return starting on or after 1 April 2019.

Some businesses have until October 2019, they are:

  • VAT groups
  • VAT divisions
  • VAT traders based overseas
  • Trusts
  • Unincorporated charities
  • Certain public sector bodies
  • Annual account scheme users
  • Companies who pay more than £2 million of VAT per year who must make VAT payments on account

You need to take action NOW to be ready for MTD by April 2019 if your business does not fall into one of these categories.

What is MTD?

Making Tax Digital is HMRC’s implementation of a fully digitalised tax system, which will eventually cover all taxes. The first stage is the filing of VAT returns involving the requirement for you to maintain digital accounting records.

Filing VAT returns / digital link

In order to meet MTD requirements you will need to file your VAT returns slightly differently. Instead of filing electronically or manually via the Government Gateway you’ll need a new login and ‘digital link’ to the MTD portal. From here you can file from your accounting software or a spreadsheet. Rayner Essex work with all the most widely used online accounting solutions platforms and we can work with you to set this up.

This is what you must do…

At present, you’ll be preparing and filing your VAT returns using accounting software, spreadsheets or manual accounting records. What you need to do now depends on which of these methods you are currently using.

Accounting Software

The number of MTD compliant software packages has increased over the past few months. As a result, you need to ensure that the software you are using is on the HMRC list and that it is the latest version of the software. If not, then you may need to change software suppliers in order to ensure compliance.

Spreadsheets

There are several MTD spreadsheets now available to enable you to manage your VAT return filings. In the first instance a simple link from the spreadsheet to the MTD portal will suffice for the ‘digital link’. This will eventually need further development so that the whole spreadsheet is linked and forms the business digital account. Take note – failure to do this will result in penalties after the first year.

Manual Accounting Records

Unfortunately, manual record keeping will no longer suffice, therefore you will now need to keep reasonable accounting records in a spreadsheet as a minimum. This can be quite simple as initially only the VAT summary page need be considered the ‘digital link’. In time, your spreadsheet will need to become more sophisticated in order to be fully compliant.

Rayner Essex can help you become MTD compliant.

Here’s what we can do:

Existing Software

Offer advice and support in determining if your software is compliant and then assist you to set up the new link to the HMRC MTD Portal. Software isn’t compliant? Don’t worry, we can advise and recommend options for migrating to new compliant software.

Moving to Software

Review your accounting requirements and advise on software selection and implementation as well as help setting up the link to the HMRC MTD portal.

Spreadsheets

Assess your current use of spreadsheets for your accounting records and/or VAT return filing. Then help tailor your spreadsheet and/or adopt a new MTD compliant spreadsheet to enable filing your VAT return under MTD.

  • Another option is for us to review your VAT workings and tailor your spreadsheets for submission via our own practice software.
Manual Accounting records

Advise and support in setting up a straightforward spreadsheet for you to use to record your monthly business transactions and facilitate the filing of your VAT returns under MTD.

Bookkeeping

Manage all of your bookkeeping on your behalf, submit your VAT returns through MTD compliant software, and also provide you with additional management reporting for you to review your business on an ongoing basis.

Whatever stage you’re at in progressing with Making Tax Digital, Rayner Essex has a tailor made solution to suit your requirements and give you peace of mind. For more information and contact details for our MTD experts visit our website here.