VAT registered businesses with a threshold of £85,000 should start digitising tax. HRMC has announced this policy recently which is effective from April 1st, 2019. Even if your current turnover is less than the threshold above, you can sign up for MTD for VAT as it is here to stay.
Many compatible software are available for digitising tax. The other option is to seek professional help. At Pearl Accountants, we have different systems for Making Tax Digital (MTD) for VAT. We work on QuickBooks, Sage 200 and Xero to follow the new rules and regulations.
The new policy does not apply to businesses with deferred MTD. They have to wait until October 1st, 2019 to get familiarised with the system.
So, make sure that you identify if your business falls in the deferred category or not. If you are liable to submit your MTD by VAT by this April, do not miss the deadline. There are huge penalties for those who fail to do so. Hence, check your status beforehand to avoid any inconvenience.
What is MTD?
Making Tax Digital is part of the global movement to digitise tax. It uses compatible software to record transactions in a fast and efficient manner.
In other words, MTD is an initiative towards the “Real Time Filing”. This will encourage VAT-registered businesses to record their returns through HMRC’s MTD APIs. It is better for you to get used to this system now or hire someone who has hands-on experience in MTD. Pearl Accountants has a team of certified accountants who have been dealing with digital returns for a while now. So, they are competent enough to guide you throughout the process. Talk to our MTD Accountants today to find out if you should file VAT this year or wait till next date.
Who Is MTD For?
Making Tax Digital is not only for local businesses. Entities operating from other countries and charities also have to meet these requirements.
How Can I Prepare Myself for MTD for VAT?
Start maintaining a digital record of your business transactions from the beginning. If you are using software for bookkeeping, make sure it is compatible with the HRMC system. If you are still sceptical about anything, contact an expert for consultation.
What Should Your Digitised Tax Include?
First off, you do not have to keep other records once you start making tax digital. As for the details of the returns, they should mention the supply time, value of the supplies and the VAT charged. It should also have complete details of your business (name and postal address). Furthermore, mention your VAT registration number along with the accounting methods you use.
Above all, be careful with the numbers as they make a significant impact on your VAT tax returns. The new system can save you penalties by highlighting the mistakes on time.
You may also like: Getting Ready for Making Tax Digital (MTD) with Cloud Accounting Software
About the Author
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning. Connect with him on LinkedIn, Twitter, Facebook or Instagram.