Making Tax Digital (MTD) is the implementation of a fully digitalised tax system. The primary aim of MTD is to make tax administration more efficient, whilst reducing HMRC’s overheads for managing tax affairs. The changes apply to a wide range of taxpayers including businesses, landlords and self-employed professionals.
By April 2019, all VAT registered businesses with turnover above the VAT threshold (£85,000) will be required to maintain digital records and send their VAT information using third party software.
Step 1: File your returns online
MTD is different to the existing HMRC portal you will currently be using to file your VAT returns. It will provide a digital link from your accounting records to your VAT return.
If you currently compile your VAT return either partially or completely using spreadsheets, you will still be able to do this. However, there must be a digital link between your spreadsheet and your VAT return.
All transactions will have to be stored digitally but documents can continue to be stored in paper form.
Rayner Essex are here to guide you
With now less than a year to go, businesses should be making sure they are ready for MTD. If you have any questions about MTD please give us a call. Rayner Essex have a specialist MTD team who can help you every step of the way.
Step 2: Choose your software
MTD will require you to use third party software to complete your tax returns. HMRC are running a small pilot, in which we will be taking part, but the full system requirements have not been published. HMRC are in discussions with all the major accounting software providers to enable them to adapt their software which will provide the link to enable VAT returns to be filed. The number of compliant software packages is increasing on an almost weekly basis and we will endeavour to keep you informed via regular updates. We will provide more information after the HMRC pilot has been completed.
Step 3: Use our App
Rayner Essex have also invested in an excellent App to make the transition to MTD even easier. You can use our app to keep track of your invoices and any expenses digitally. You can download the app here.