What is Making Tax Digital?

Making Tax Digital will change the way your business updates the HMRC regarding your company taxes. The first of these changes will come into play in April 2019 with Making Tax Digital for VAT. From April 2019, VAT-registered businesses (those companies with their turnover over the VAT threshold, which is currently £85,000) will be required to digitally submit their tax records to HMRC. They will no longer be able to do this via HMRC’s Government Gateway website.

What does MTD mean for my business?

If you are VAT registered then you will need to move to digital record keeping (i.e. use software to record all your VAT invoices and receipts). If you are not VAT registered then digital record keeping is optional for now. If you are VAT registered and do not yet use software to record your VAT information (invoices to customers and from suppliers) you need to start planning for Making Tax Digital. The new implementation date is 1 April 2019. Speak to one of our advisors today about MTD and then we can ensure you are good to go and fully compliant with the new MTD requirements before the deadline.

What will I need to do?

Don’t be put off by this change, take Making Tax Digital as an opportunity. This is your chance to streamline your accounting and business management. Keeping records and filing tax digitally gives you the chance to update your processes, check your income, expenses and profit and potentially make better business decisions as a result. Essentially all you need to do is record your taxable records and submit your VAT returns through MTD-compatible software.

Do I have to do everything digitally?

You must keep certain information – such as VAT-related transactions – in digital form. HMRC’s MTD rules state that all VAT registered businesses must “keep and preserve” their income and outgoings within “functional compatible software”. Therefore you need to start recording and storing your financial records using software or apps and be able to send this financial data to HMRC using HMRC-recognised software or apps (i.e that’s software that can link to HMRC’s API platform).

IS WINACCS MTD COMPATIBLE?

Yes, WinAccs v7.08. Compact Software has been busy building MTD functionality and working closely with HMRC for a while so we are already good to go for April 2019! You will find us listed on the HMRC website’s compatible software list.

when will winaccs 7.08 be available

It will be available no later than March as you will need it installed before you process your last PAYE submission for 18/19.

WHEN WILL MY FIRST MTD SUBMISSION NEED TO BE DONE?

The first VAT submission after the 1st April 2019 you must use MTD, this also requires you to be registered with HMRC VAT office to allow MTD submissions.

DO I HAVE TO COMPLY WITH MTD?

Yes, there will be penalties implemented by the HMRC. They have published details of the penalties system for late submissions and payments under Making Tax Digital confirming HMRC plans to pursue a points-based model. The surcharge penalty system for VAT applies for both late payment and late filing and can result in huge penalties for VAT payments which are only one day late.

HOW DO I KNOW I’M READY?

As long as you install v7.08 before end of March and make sure you have purged your records for previous submissions, you will be ready.

WHAT IF I HAVE ANOTHER SYSTEM FOR SOME OF MY VAT TRANSACTIONS?

You have until 2020 to come up with a digital link to merge the records into one system for submissions. If you are using multiple MTD compliant software solutions, there is the ‘soft landing period’ which is intended to give these businesses with multiple solutions a little more time to prepare for Making Tax Digital. Your multiple solutions must be digitally linked. For 12 months from April 1st 2019 the use of ‘cut and paste’ will constitute a digital link

WHAT IS THE MAKING TAX DIGITAL SOFT LANDING PERIOD

If you are using multiple MTD compliant software solutions, the soft landing period is intended to give these businesses a little more time to prepare for Making Tax Digital. Your multiple solutions must be digitally linked. For 12 months from April 1st 2019 the use of ‘cut and paste’ will constitute a digital link.

can i submit my vat return for multi-companies

Yes, this can be done within the VAT submitting process. For the companies to be included in the consolidation they each need to have the same VAT registration code entered in the companies parameters.

I HAVE SOME RECORDS IN EXCEL. CAN I KEEP USING THESE?

Essentially yes. It is possible to use software which will allow you to ‘bridge’ programmes like Excel (which are not MTD compatible themselves) with HMRC’s platform. However this can get complicated and using one solution may be easier.

I HAVE SOME PAPER RECORDS. CAN I KEEP USING THESE?

With some very limited exceptions, each and every transaction must be recorded electronically. Taking totals from paper records and recording those totals electronically does not meet the requirements of MTD. Records would have to be entered entry by entry into software which is likely to be very inefficient whilst using software may be easier.