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Making Tax Digital

New MTD rules come into play on the 1st April 2019.  They will require most VAT registered businesses to keep all their VAT data as digital records and submit VAT returns using MTD-compliant software.

There are essentially three principals of MTD:

·         Digital retention of records.

·         Maintenance of Digital Links between all parts of the accounting system giving rise to the final VAT return.

·         Direct digital submission into HMRCs systems.

The digital retention of records and direct digital submission come into effect from next year, but HMRC has realised there is not enough time to redesign all systems by this time, so the maintenance of digital links does not become compulsory until 1st April 2020.  Digital linking will exclude the use of human retyping or cutting and pasting into spreadsheets. Transfers of data between different software packages should also be digital, which can be complex interfaces between software packages or spreadsheet numbers automatically read by an accounting package.

VAT registered businesses with an annual turnover under the £85,000 threshold won't have to comply with MTD, but once they exceed the threshold, they must remain MTD compliant regardless of turnover from that point. The MTD threshold is complicated by the nature of a business’s turnover and whether that income is exempt from VAT or overseas sales. A business, for example, with £150,000 turnover, where £80,000 is from supplies to overseas businesses – leaving £70,000 UK income – will not be required to comply with MTD. Property developers, with projects worth millions – and where years may pass before any sales are made – may not need to comply.

There may also be additional complications between different kinds of businesses with the type of digital records they maintain. Retailers, for example, may have additional requirements to comply with.

It is important that your business takes VAT advice on all matters regarding MTD and its obligations towards MTD.

Braant is fully dialled in to the digital realm and uses all forms of MTD compliant cloud and desktop software. We can also create digital links for your business or move you to a fully MTD compliant platform. Please call us to discuss further, if you are concerned about MTD.

A Sponsored message from our Content Partner Braant Accounting 

 

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