As the start to MTD (Making Tax Digital) draws ever closer, can you honestly say that you’re totally prepared for it? To remind you, Making Tax Digital or MTD is a Government scheme designed to consign paper-based record-keeping to history. If you own a VAT-registered business, you will need to launch your preparations for MTD by 1st April 2019.
If you are registered for VAT and have a VAT taxable turnover of at least £85,000 per year, you will be expected to complete and keep digital VAT records from 1st April. If you don’t already have MTD-compatible software in place, you will need to start using it from this date. Although those that don’t meet the threshold don’t need to comply with this, it’s advisable to starting using MTD-compatible software or work with an accountant right away. Many companies are choosing to do this voluntarily. You will either need to file quarterly VAT returns through your accountant or with compatible software.
What needs to be kept and filed digitally?
You must keep records including your business name, address, VAT, and data related to invoices received, such as when invoices are sent and when payment is made. You will also need to digitally file the value of the product or service and the VAT rate charged. It’s also essential to keep digital VAT records for services or products that you receive from other businesses.
The risks of doing it alone
VAT is a famously complex area. If you don’t have significant experience in this field, confusion can occur. By enlisting the support of a qualified and experienced accountant, you can take the stress and strain out of preparing for and complying with Making Tax Digital for VAT and avoid making mistakes when filing. In preparation for this, It’s wise to start keeping digital records in advance of 1st April if you aren’t doing so already.
The future of MTD
Future Making Tax Digital changes are in the pipeline. MTD is set to cover Income Tax and National Insurance Contributions in the next few years, with public beta testing already taking place. Once this is rolled out, you will need to record your income and expenses in software that complies with MTD or use an accountant that can do this on your behalf. You will need to send income tax updates to HMRC on a quarterly basis and send a final report following the end of your accountant period, confirming your income and expenses for the year. Once you have done this, you will find out how much income tax you need to pay.
How Morgan Reach can help
At Morgan Reach, we know that preparing for MTD is stressful and a massive distraction for businesses currently. This is why we aim to take this burden away from our clients. We constantly keep ourselves up to date with the very latest legislation and can help you avoid making costly and time-consuming errors, freeing you to focus on what you do best, safe in the knowledge that your tax matters are being handled by highly competent and experienced accountants and bookkeepers.
If you feel unprepared for MTD, you can get in touch with Morgan Reach today by calling us at our Manchester, Birmingham or London offices or by completing the short form on our website.