MTD zero-hour is here.
The moment has come: if your business has a taxable turnover above the VAT-registration threshold, which is currently £85,000, you’re now obliged to keep records in digital form and to file your VAT returns using HMRC-approved software.
Software soft landing
One concession made by HMRC is around the links between individual pieces of software within your business.
It is a legal requirement under MTD that the programmes you use for recording and processing financial information connect with each other fully, and purely digitally.
In other words, you shouldn’t be manually copying information across from one to another, or even cutting and pasting between programmes.
The link either needs to be automatic, or work through some sort of ‘import data’ function, removing (or at least reducing) the potential for human error, or fraud.
In practice, though, the Government has decided to permit a year’s grace, up until 31 March 2020 for most users.
This will allow businesses to keep cutting and pasting while they work out how to integrate their various software packages, or give them time to source and roll out new ones.
What you need to do right now
If you handle your own VAT returns, there are a few things you need to straightaway, if you haven’t already – and we really hope you have, because there are penalties for failing to comply.
First, make sure you have MTD-compatible software. A list of approved packages is available on the HMRC website, including some that are free.
In many cases, you will also be able to use your existing software, including spreadsheets, as long as it is capable of communicating directly with HMRC’s systems, or works with ‘bridging software’ that can perform that function.
You then need to make sure the MTD capabilities of your software are enabled, before delegating authority to the software via your Government Gateway account.
Then, you need to register for MTD, also via the Gateway.
Be aware, though: once you’ve signed up to manage your VAT returns via the Making Tax Digital process, you can’t go back.
If you’re not a client but would like advice on ensuring compliance with MTD, or help with your VAT returns, get in touch now.
Talk to us about Making Tax Digital. Contact Anita Mason