Starting from April 2019 VAT registered businesses with a turnover of over £85,000 will have to register for digital tax, with a few exceptions
Making Tax Digital (MTD) for VAT will come into effect from 1 April 2019 for businesses which have a taxable turnover above the VAT registration threshold (currently £85,000). As part of the initiative, firms must keep some records digitally, using ‘functional compatible software’. This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’.
Accounting records will need to be either be kept digitally on compliant, compatible software or on a spreadsheet using bridging software to ensure digital tax compliance is complete.
HM Revenue & Customs will require VAT returns to be submitted to using software as mentioned above. These software platforms have been tested to access the HM Revenue & Customs platform seamlessly.
HMRC have a list on their website of all software providers that are compliant or in the process of becoming compliant for VAT and Income Tax.
With compliant software it will take a few small adjustments before you are able to file VAT returns as you were previously.
Figures published by HMRC show that almost 1.2 million businesses will be affected by MTD for VAT. Additionally, each day more than 3,000 businesses are signing up to the scheme, according to the Revenue.
Commenting on the initiative, Mel Stride, Financial Secretary to the Treasury, said: ‘In a world where businesses are already banking, paying bills and shopping online, it is important that the tax system moves into the 21st century.’
Meanwhile, Theresa Middleton, Director of the Making Tax Digital for Business programme, said: ‘There are over 220 software products for businesses to choose from at a range of prices, including free ones, offering different levels of functionality.
‘I’d urge any business affected by MTD to start preparing now, and to join the thousands of others who are already experiencing the benefits MTD has to offer.’
As an authorised Agent Service Provider we have already started to move our clients to the new digital tax platform. We welcome new businesses that may require further help to meet the obligations of MTD. Simply contact us to discuss your business requirements.
