With the clocks set to change imminently we are all reminded that Spring is fast approaching, meaning we can soon forget about the bitter Winter months, however, spring not only brings us new life in the form of flowers and lambs but also HMRC’s latest legislation – Making Tax Digital.
What is Making Tax Digital?
All VAT returns submitted for quarters beginning on or after, 1st April 2019 (where the VAT payer’s turnover exceeds £85,000) have to be submitted using HMRC’s new MTD platform. Making Tax Digital (MTD) is an HMRC initiative that means that VAT returns from April 2019 will need to be filed through software, the old government gateway will no longer be an option.
Currently, 85% of VAT submissions are submitted via HMRC’s government gateway and only 15% through accounting software providers, in the future 100% of submissions will be inputted through third party software through Application Programming Interfaces (API’s) to Multi-Channel digital tax platforms (MDTP).
Why has it been put in place?
Mel Stride, Financial Secretary to the Treasury, said:
“Anything that helps businesses to manage their tax more easily so they can focus on what they do best – innovating, expanding, and creating jobs and profits – is what every modern business needs. In a world where customers and suppliers are already banking, paying bills and shopping online, it makes sense for HMRC and businesses to bring tax affairs fully into the 21st century.”
The fledgling legislation isn’t a just process specific to the UK we are joining this process 2 years later than some countries such as Brazil, Italy, and Spain. Tax competition between countries will continue to shift aiming to make everything more transparent.
When is this happening?
Set to be mandatory at the start of April this means you have less than 40 days left until the legislation becomes mandatory it would be wise to look into the different options you have.
How can I tackle this?
You can start using an HMRC registered software supplier such as My Digital Accounts which specialises in the temporary labour market. My Digital Accounts is a full bookkeeping package which is fully MTD compliant and is currently participating in the pilot scheme.
If you don’t want to invest capital in accounting software yet, or you want to prolong using your spreadsheets for as long as possible HMRC have allowed the use of Bridging Software solutions.
My Digital Bridge enables you to key into a spreadsheet and to upload your 9 box excel into the software which intuitively populates the VAT return and submit. it also allows you to view past submissions and payments to the VAT account.
Feel free to get in touch if you have any queries about Making Tax Digital and we will help you to get ahead of the new legislation