By 2020, HMRC’s Making Tax Digital (MTD) initiative will mean that businesses and individual taxpayers will be able to access their own tax affairs online via digital tax accounts.
The next phase of this programme, Making Tax Digital for VAT, starts from the 1stApril 2019 and requires digital VAT record keeping and VAT returns to be submitted electronically for the majority of businesses that are VAT registered.
From this date businesses will be required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns.
The shift in VAT reporting brought about buy MTD from April 2019, introduces some significant new rules for how most businesses will submit their returns.
MTD for VAT focuses on three key requirements;
- That records must be kept digitally – storing all transactions in electronic form
- That there are digital links to all transactions – i.e. there is a digital link between final numbers and source data.
- All VAT submissions must be made digitally – there are a few exceptions for specific companies with complicated returns.
There are various accountancy software systems available which enable businesses to adhere to this requirement. James Scott Accountants recommend Xero software as their preferred option.
As Brendan Fitzpatrick,Partner at James Scott Accountants explained:-
“Although in the short term the new systems may cause some disruption to the process in which businesses report to HMRC, in the long run we envisage most businesses benefiting from the streamlining and more transparent reporting which the digital software offers.
Our clients that are embracing the new systems, are benefitting not only from the accounting software, but also from the wealth of “bolt on” software which is available to make various processes within a business faster, easier and therefore more efficient.”
If you need help or advise with MTD please contact Brendan Fitzpatrick on 0161 653 2274 or email firstname.lastname@example.org or fill in our enquiry form online.