Making Tax Digital (MTD) is a government initiative to revolutionise the tax system in the UK and bring it crashing into the 21st century.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.
What Does This Actually Mean?
From April 2019 businesses above the VAT threshold will be mandated to keep their records digitally and will need to send their VAT information to HMRC using third-party commercial software. HMRC’s online portal will only remain available to businesses that complete a VAT return and have turnover below the VAT threshold.
How to Keep Digital Records
HMRC is working with a number of software suppliers who have said they’ll provide MTD compliant software in time for April 2019. This list includes Xero, Sage (v24+) and QuickBooks. If you use spreadsheets to keep business records, bridging software will be required to make them MTD-compatible, although there is limited information on what this will cost and how easy it will be. HMRC have stated that they will not be providing any free software.
What the future holds?
The government plans to widen the scope to include other taxes in the future, however, this will not be before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
Our advice at Cottons is to embrace the change. Our cloud team are trained and experienced on a range of cloud-based solutions that will be MTD ready and are helping multiple clients every day make the change. We are hearing great reviews from our clients on how much easier, quicker and useful their book-keeping is now and how pleased they are to have moved from manual cashbooks or excel spreadsheets into the cloud.
We offer a free 1 hour consultation with our cloud team to discuss your options for MTD and to put a plan in place to make sure that you will be compliant. We then also offer a range of setup and training packages to suit every business.