Making Tax Digital – Less Than Nine Months to Go
From April 2019 all but the smallest of unincorporated businesses will be required by
law to make their VAT returns digitally. As part of HMRC’s Making Tax Digital (MTD)
businesse will need to keep their underlying records digitally too. For clients on an
annual VAT scheme this is already a requirement.
HMRC’s publicity on this has been sparse, so we’d thought we’d reminder you, and answer the most common questions.
We want you to understand how MTD can benefit you and your business, without causing you too much hassle, providing you get prepared.
Here are some common questions, which we hope will help you with your preparations regarding MTD.
1. What is MTD?
It is a government driven initiative, via HMRC to narrow the tax gap by encouraging
businesses to keep better accounting records on a timely basis. Basically the taxman wants to have more regular information about you and your business.
2. What’s in it for me and my business?
We believe that every business can benefit by having better financial information at
their fingertips. This should enable you to make better business decisions, to allow us to give you better more timely advice, and more importantly to stay on top of what tax you will need to pay. In our view having better accounting records and reports should also make it easier to obtain finance, should you need it.
3.What do I have to do?
Get in touch with your accountant to discuss your individual requirements. The general necessity is to keep your accounting records digitally because you will need to submit quarterly reports to HMRC instead of the old annual tax returns. Instead there will be a fifth
submission at the year end.
4. How can O&K Help Me?
Via our unique service called Elevate, we will help you choose suitable cloud accounting software, which in turn will enable you to keep on top of all your accounting records and comply with MTD.
5. What are the deadlines?
MTD will cover VAT returns from April 2019. If you are on an annual VAT scheme this may already apply to you. MTD for quarterly income and corporation tax submissions will follow afterwards.
The current deadline is for this to begin for year ends after April 2020. Please note that the quarterly deadlines only give 30 days to submit (current VAT return deadlines are 1 month + 7 days) and returns must be submitted at least once a quarter even if you are on an annual VAT scheme.
6. Will my accountancy fees increase?
There will clearly be extra work for us to do with five submissions per year instead of one. Whilst we anticipate an increase in workload we have invested in software to improve our
internal efficiencies which, together with your investment in good cloud based accounting software such as Xero, will hope to keep any fee increases to a minimum.
7. What should I do next?
Get in touch with us. We have been using online accounting software packages for a while now, so are well placed to make sure you are ready for MTD. We will ensure any transition is easy and smooth. Our job is to make like easier for you, so that you can focus on running your business.