Despite the digitalisation of all accounting being announced back in 2015, the original anticipation date of 2020 has been put into question. Here we establish what’s going on with Making Tax Digital (MTD) and what it means for small business owners.
When is MTD happening?
The Director of the MTD for business programme, Theresa Middleton, confirms that the both the income tax and VAT MTD projects currently on schedule. For those VAT registered businesses whose income is over the VAT threshold of £85,000 then from April 2019 they will need to submit their VAT returns via MTD compatible software, or bridging software for those using spreadsheets or legacy bookkeeping systems.
Although the update for MTD for Income tax is still going ahead, the earliest any changes would become obligatory is 2020. There is no exact date in place as of yet, the abolition of the tax return may not be as close as originally expected.
Should I prepare for MTD?
With April 2019 around the comer, the chance of other MTD for business changes becoming mandatory within the next couple of years is increasing. It is definitely best to start preparing now to be ready in time. HMRC have made some suggestions for preparing clients are:
- Plan ahead
- If you are an agent then Inform clients about MTD and their responsibilities to keep digital records
- Decide how you are going to keep digital records
- Ensuring individuals are registered with HMRC to access both their business and personal tax accounts
GoSimpleTax will be providing a solution for VAT in advance of the mandated date of April 2019. Our tax software is recognised by HMRC and we are working with HMRC on releasing our VAT bridging software so you’ll be using tools you are able to trust.
Am I able to transfer data to bridging software?
Within the first 12 months of MTD for VAT, then HMRC will then allow you to manually type in the 9 boxes of the VAT calculation to your bridging software. However, from 1st April 2020, this process will need to be automated. GoSimpleVat will allow you to import VAT report calculations from either spreadsheets or a PDF of the calculation from third part software.
Can I use something other than bridging software?
Yes, if your current bookkeeping software is being updated to file your VAT via the new MTD system. If you are using a spreadsheet or an old unlicensed bookkeeping system then you will need to use bridging software.
For example, GoSimpleBooks have been working closely with HMRC to add MTD for VAT filing and has now released MTD for VAT to run alongside the HMRC public beta program. This will give users time to become acquainted with the regime ready for the start of MTD for VAT in April 2019.