Making Tax Digital
Making Tax Digital (MTD) is the HMRC initiative to get everyone reporting digitally. The four foundations are:
HMRC will use information from third parties, such as employers, banks and other government departments so that individuals will not have to supply information themselves.
HMRC will obtain and process information affecting tax as close to real time as possible, so that individuals and businesses no longer have to wait until after the end of the tax year to know how much tax they have to pay.
At the moment most taxpayers cannot see a single picture of their liabilities and entitlements in one place. By 2020, customers will be able to see a comprehensive picture in their digital account.
Customers (and agents) will be able to interact with HMRC digitally at a time to suit them.
There are already individual digital tax accounts set up with an increasingly personalised picture of tax affairs and this will be developed along with support and advice through webchat and secure messaging. Digital records keeping will link directly with HMRC systems allowing customers to securely send and receive information through their software.
MTD for VAT
2019 sees the first roll out of this process with MTD for VAT. The two key requirements for this are:
- To keep transaction-level records digitally; and
- to use compatible software to submit VAT returns to HMRC.
These requirements will be imposed on businesses that are mandated to be registered for VAT and will apply for VAT return periods beginning on or after 1 April 2019. Those who are voluntarily registered for VAT will not yet be affected.
Current estimates are that only 12% of businesses file their VAT returns directly through accounting software. The remaining 88% manually type their VAT figures into VAT Online Services having calculated their VAT figures manually or on a spreadsheet or other software not linked to HMRC. For most VAT registered businesses this will no longer be possible after April 2019.
How Maynard Johns can help …
If your current bookkeeping method does not allow you to submit directly to HMRC through compatible software you need to start preparing.
If you think that you do not have the time to carry out this yourself, we can offer an all-inclusive service that will take the worry off your shoulders. We will carry out all of your bookkeeping in-house and, once you have approved the figures, submit your VAT to HMRC on your behalf with our fully compatible in-house software.
Alternatively, if you currently have a manual bookkeeping system we can offer bespoke set-up on Xero, fully customised to suit your business and train you in how to use it. Click here for full details
If you currently have a computerised bookkeeping system but are unsure if it is compatible with MTD, contact us for assistance.
Visit us in our Bideford office or give us a call!
Telephone 01237 472071