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We are not just accountants, we are business owners. We understand the myriad of pressures on your time.
Our focus is your success through combining the latest technology with traditional values.
Within this newsletter we will share the latest updates on Making Tax Digital (MTD) including who it will affect, how to ensure you are compliant and who are the MTD-compatible software suppliers.
To read the latest regarding MTD as of October 2021, please read out blog post here.
MTD was originally postponed, however the mandatory start date for MTD for VAT has been set, 1st April 2019. This requires any UK business who is registered for VAT with a turnover above the VAT threshold of £85,000 to submit their returns digitally from their first VAT Return starting on or after 1st April 2019. This applies for any business registered on the standard or flat rate scheme.
If a company’s turnover falls below the threshold after 1st April 2019 and they stay VAT registered they will still be required to submit VAT returns digitally. This applies to all businesses unless they deregister or fall into liquidation.
All records must be kept digitally and the returns must be submitted using any of the software suppliers working alongside the HMRC in support of MTD for VAT. To find out who these suppliers are please click here.
From experience, we strongly recommend for any company who is VAT registered to commence digital reporting prior to 1st April 2019 due to the increase in transparency and efficiency it has brought to our own business and clients.
Xero is one of our main accounting software’s which we use for our clients at CooperFaure and we are delighted that Xero is one of the software suppliers working alongside the HMRC in support of MTD. Therefore, Xero will automatically upgrade Xero’s VAT functionality to ensure that we will be using MTD-compatible software come 1st April 2019 with no upgrade fees attached. Due to this our clients are MTD ready and this is the same for anyone else currently using Xero.
At present numerous companies are still keeping their records and information on non-digital platforms, for example within Excel spreadsheets and then manually submitting the VAT Returns on the HMRC online portal or by post. In comparison, software that is compatible for MTD will integrate with HMRC directly to submit VAT returns. This ensures that the information equating the totals on the VAT returns will be much more easily accessible within digital software. It will increase transparency as a clearer audit trail will be available and copies of receipts and transactions can be kept in one place. Using software to connect directly will also minimise human error as well as increase efficiency within the business and between businesses and their agents.
From April 2020 all data for the VAT returns must be transferred digitally between each software within the business. This means that any data within a spreadsheet must be connected to a compatible MTD bridging software to pull the information digitally to HMRC. HMRC have announced that they will not be providing their own bridging software for businesses to use. However, they are providing Application Programming Interfaces (APIs) to enable commercial software developers to set up the integration between their software and HMRC.
There is no requirement to keep any additional business records because of MTD, but the records that are kept must be done so digitally in order to be compliant. Additionally, when MTD come into action the VAT return periods and the payment deadlines will not change.
Income Tax and Corporation Tax for MTD has been placed on hold and will not be compulsory until at least April 2020, but the option is available to voluntarily take part in the Income Tax pilot. HMRC has made a software available for agents or clients themselves to send Income Tax updates digitally. This has been put in place as a substitution to filing a Self-Assessment tax return. You can sign up to use this service if at least one of the following applies:
To sign up for this service, please click here.
Please click here to see which software providers connect can send Income Tax updates.
We at CooperFaure fully support MTD and can see the long-term positive effects it will have upon individual businesses and for the economy as a whole. We strongly advice everyone to take this opportunity to streamline their businesses and make the most of the new innovative technology that is now available. We believe this is a small step into the future of accountancy and we are excited to be a part of it.
If you have any queries or would like any assistance to ensure you are ready for MTD, please do not hesitate to contact us on firstname.lastname@example.org.
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