Much like Brexit, Making Tax Digital or MTD as it’s become known, is only a matter of weeks away…
Now, as much as both seem to be rather scary, at this moment in time, you do at least have some control over one of them!
HMRC are finally updating their archaic systems, which have been in place for over 20 years, and are finally entering the 21st Century and going ‘Digital’. In doing so, MTD comes into effect from 1st April and will affect businesses and individuals with a turnover of above £85,000.
I can hear the groans already, but trust me, this is a good thing, really! For now, all that will change is the way you submit your VAT returns to HMRC – instead of typing in the numbers through the current government gateway, you’ll register for a new digital portal and submit using a MTD compliant software. You can find a list of providers here.
If your VAT return period starts on or after 1st April 2019, you’ll need to submit this digitally through the new portal. For example, the first quarterly digitally submitted VAT return will be quarters that end on 30th June 2019, which will need to be submitted by 7th August 2019.
Interestingly, the UK isn’t the first country to ‘go digital’. The likes of Mexico have been ‘there’ since 2010, China since 2014 and Italy most recently from 1st January 2019. Italy in fact, have to submit every single sales invoice they issue to their government, and if they don’t, the penalty for this is 180% of the VAT that was due on the invoices! So, in comparison, our changes don’t seem too gruelling and some might even say we’re getting off lightly – certainly in comparison to Italy!
It’s important to recognise that HMRC aren’t just making these changes to add to your every growing pile of work as a business owner – It’ll actually help with the everyday running of your business. By holding/recording your finances digitally, you’ll be able to see a ‘snap shot’ of where your business is at on a daily basis, rather than just once a year, when you hand all your information to your accountant with your fingers crossed, hoping for a ‘good news’ phone call.
So, with this in mind, how MTD ready are you? Don’t worry, if this is the first you’re hearing about it – as I write this, 43% of businesses are also not ready. Importantly, there’s still time to act. , If you’d like to know more about MTD or need advice on setting up your new digital portal, then please feel free to get in contact with us. We’re here to help you.
For more information on MTD of any other Business Advisory or Accountancy needs, contact Charlotte Hare on 01525 717424.
Want to know more? Call us on 01604 746760 or email firstname.lastname@example.org