By now you’ve probably heard of Making Tax Digital or MTD
To recap, MTD is ultimately about the government collecting more tax more quickly each year – so it isn’t going to go away and like it or not we are all going to have to learn to operate in an MTD world!
Making Tax Digital starts with VAT (more on this in a moment) – but the idea is that all tax payers – individuals or corporates – will have a digital tax account. After VAT, further taxes will get added to MTD compliance – with corporation tax coming next. We are all going to be expected to make quarterly returns and pay taxes as we go – no more submitting accounts months after your year end & eventually receiving a bill. It is clearly very important to ensure that your numbers are up to date and accurate before these returns are submitted!
This is worth thinking about now because your solution for complying with your VAT obligations under MTD, really needs to be able to comply with all your future obligations if it can’t you’ll find yourself making multiple changes).
So what happens next?
For your first VAT return for your first VAT reporting period starting after 1 April you need to make an MTD compliant VAT return. This means you need to report in a digital format and keep digital records (paper is not going to suffice).
There are bridging solutions that you can use during a twelve month soft launch, but we would recommend that you think about either:
- Introducing some form of cloud based accounting package if you are not already using an MTD compliant system, or
- Talk to us about potentially outsourcing your VAT returns to us.
If you’re already using an MTD compliant solution there are also some things you need to do. These might include:
- Making sure that you actually use your MTD enabled accounting system to submit your VAT return. Believe it or not, many people run their VAT numbers in their accounting package but then still enter the figures manually via HMRC online services.
- Check to make sure your VAT figures are correct before submitting (hopefully you are doing this anyway)
- Making sure that any more complex VAT matters such as partial exemption are either accounted for properly within your accounting system, or are prepared separately and submitted via a bridging software solution.
In any event MTD is going to be a huge change for all tax payers. The good news is we are experts in the solution you need, so please come and talk to either Lulu or Scott, their contact details are below.
Also you may find our recent blog on this topic interesting: Here’s how Making Tax Digital will affect you