Making Tax Digital
Update - August 2018
What is it?
Making Tax Digital (MTD) is a government initiative to make it easier for businesses to get their tax right and to stay on top of their tax affairs by using their new online facility.
Records and updates will be sent to HMRC directly via relevant software. It will eliminate the need to provide information twice, information from banks and employers will be automatically sent to HMRC.
Tax in real time, customers can access their records at any time and so no longer need to wait until the end of the year to find out how much tax to pay.
When is it happening?
April 2019- it will become mandatory for VAT registered businesses to use the system for their VAT returns.
April 2020- the earliest point at which other businesses will be required to use the system.
What does this mean for you, our clients?
Timely record keeping will become even more important
We will be looking at changing the bookkeeping/accounts cycle to monthly rather than quarterly/annually.
We will be introducing cloud-based accounting software which is compatible with HMRC requirements. We are already users of Xero and Quickbooks.
For our VAT registered businesses, we will be in touch to discuss your options in how you manage this new system.
Updates will be posted to the website as more information becomes available so please keep an eye out!
We appreciate that this is a big change for you, but we are here to support you every step of the way.
Check back for updates…
Making Tax Digital
Update - September 2018
From 1st April 2019, it will be mandatory for all businesses with a taxable turnover above the VAT registration threshold of £85,000 to follow the rules of Making Tax Digital.
Here is a brief guide on the new process:
• All data is submitted in a digital format. Information submitted will include business details, records of sales and purchases (including those made by third party agents) and summary data about tax to be paid and tax to be claimed back.
• The software used will send and receive information directly from HMRC. The software can be a program, product or application as long as it's able to work with the HMRC software. At this time, we do not know what software HMRC will be using.
• It’s important to remember that once information is entered digitally into any software or application, any transfer of that information must be done digitally too. We are working through the guidelines on this as manual transferring of data from one system to another will not be allowed and we will need to ensure all rules are followed when sending/receiving data to and from our clients and HMRC.
• Sales and purchases can be entered manually into chosen software and paper records stored as they are now. It is not necessary for all data to be scanned/entered and stored digitally.
• If there is a need to adjust the amount of tax due, calculations can be made outside of the system. The only input needed is the total amount for each type of adjustment.
What does this mean for our clients?
• The biggest change for you will be how often you need to submit data to us. This will need to happen monthly from April.
• The format that you send this data to us in may need to change too. We will confirm this nearer to the launch date.
• If you have already authorised us to act as an agent for you with HMRC, there is no further action that you need to take at this time.
• Further updates to come from HMRC regarding the software that they will be using
• We are looking at our processes and will be working hard to ensure that we can meet the new rules!
• We will be in touch again soon but feel free to contact us if you would like any more information!