Making Tax Digital
Most VAT registered traders will be required to file their VAT returns using MTD-compliant software for VAT periods beginning on and after 1 April 2019. If your VATable turnover is likely to be over £85,000 for the year to 31 March 2019 it is crucial to understand this software issue.
If you already use accounting software to send your VAT return to HMRC automatically you are probably OK. But businesses with older versions of software will probably need to upgrade their package to be MTD-compliant.
If you use a spreadsheet or other software to compile the VAT figures you are halfway there. There are several low-cost forms of 'bridging software' available that will pull numbers from spreadsheets or certain accounting packages and pump them through an application programme interface (API) into HMRC's system. Job done until at least 2020.
Businesses with entirely paper-based accounting records have a bigger mountain to climb. You do not have to leap straight into a cloud-based accounting package; there are other solutions we can discuss with you.
The second requirement of MTD is to have end-to-end digital accounting records. Many businesses retype figures at some stage of the accounting process, but that will not be permitted for VAT periods beginning on and after 1 April 2020. We therefore have a little over a year to work out how to completely digitise your accounting system.