At PBT we want to keep you up to date, informed and knowledgeable of all the changes happening in the finance sphere. Once such change that is coming in to play is MTD, Making Tax Digital. The purpose of which is to “modernise” the tax system.
If this is the first you have heard of MTD, you are not alone. I have clients who have never heard of it and once I mention the letters MTD they think the apocalypse is coming. On the other hand I have clients who have heard of it, but as nothing has been mentioned in the media they have come to the conclusion it must not be happening.
The fact is MTD is happening and it’s happening, as far as I can see, very subtly. It almost feels like it's tip toeing in. I’ve been searching for concrete information about what, where and how this is all going to work so that we can best placed to help our clients. Whilst I have found a few paragraphs on key dates and who MTD will affect first, I am yet to find any real detail on what fines may be involved, what software is required or any FAQ’s.
If I think back to when RTI, Real Time Information, was introduced, it was the BIGGEST change in the tax system at the time and caused waves throughout businesses. If we fast forward to the present day, we are all dealing with RTI pretty well now, right? Change can be daunting but the key is to embrace change and prepare yourself as best you can.
As a software boffin I like to get myself familiar with all forms of software from Sage to Xero to Clearbooks. As I was trawling through the latest updates, a small pop up appeared on Sage. Normally I would click the little cross and ignore it. However, the 3 letters that are MTD caught my attention and I thought it was time to share my knowledge of what this means for businesses who may not have the software that provides this information automatically for you.
So what is changing?
As of April 2019, businesses above the VAT threshold of £85,000 are required to file their VAT returns electronically using accounting software. They will also be obligated to keep digital records of all their transactions. This means that manual submission through the HMRC gateway for VAT will no longer be accepted for most businesses.
So what is the advice for businesses?
Ensure you have MTD for VAT compliant software
Start maintaining digital business records for the purposes of VAT
Sign up with HMRC MTD for VAT
Start submitting your VAT return through your compliant software
This only scratches the surface and I fear for small businesses who may be currently submitting their returns manually, using spreadsheets for their records or using non compliant software. How will they receive the advice they need?
At PBT we want to support businesses of all sizes and help them to grow and succeed. The fear is that without the compatible software, deadlines to enrol with HMRC may be missed and come April 2019 there could be a mass panic.
We are here to help businesses through the change. We will certainly be encouraging all our existing clients who are VAT registered to start preparing for the new process immediately. If you want our expert help, get in touch with our team today. “There’s a storm coming” and we are here to help you brave the change.