The countdown is on until the first phase of HMRC’s ‘Making Tax Digital’ (MTD) comes into effect.
From April 1st 2019, organisations (including self-employed and landlords) with a turnover above the VAT threshold of £85,000 will need to keep digital records for VAT purposes, and submit VAT returns to HMRC using MTD-compatible software.
MTD is part of the government’s plan to make it easier for businesses to stay on top of their day-to-day accounts. HMRC wants to be one of the most digitally advanced tax administrations in the world, improving efficiency, effectiveness and ease of compliance.
Other areas of MTD, such as Income Tax and Corporation Tax, have been put on hold until April 2020 at the earliest.
MTD & You
So what does that mean for you as a business?
Well, you may already be compliant without realising. If you’re using cloud software, such as Xero or Quickbooks, you will already be well on your way to tackling MTD head on. The vast majority of our clients are on cloud software, so we don’t anticipate any need to change things, however, if you aren’t, now is a good time to have a look at HMRC’s list of software suppliers and pick one for yourself!
HMRC are currently working with over 150 software suppliers to make sure that they’re going to have enough software available to everyone to complete the move into digital by April. More than 40 suppliers are already in a pilot scheme with HMRC to test out the product and ensure that it will be ready by the launch date.
According to research by Intuit, over three-quarters (76%) of small business owners cited understanding the legislation as a challenge, followed closely by finding new tools to help them comply (70%), finding time (66%), managing additional work (64%) and choosing the right cloud-based software (63%).
In our earlier blog, we outlined an action plan for you to undertake, including discussing with your accountant, reviewing your current systems, embracing the cloud, and setting up your milestones. Almost a year has passed since then and we now have only a few months left to get everything in order.
If you need help navigating the switch to a digital world, get in touch with the team today.
We can set you up and have you ready for the April deadline. We can also advise you on how, and when, you should start to digitise your records and the best software and processes for doing so. We can identify the software that will work best for you and your company to ensure the process is as smooth as possible.