Are you aware there isn’t long left until Making Tax Digital for VAT comes into force? From April 2019 VAT registered businesses with a turnover over £85,000 will need to ensure that all VAT returns are submitted digitally using the HMRC new platform known as Making Tax Digital (MTD). Around 40% of businesses that will be affected by MTD when it comes into effect are still unaware. Therefore, HMRC has recently started an awareness campaign to get businesses prepared before the date.
Here, Go Simple Books take a look at what you expect from the campaign and Making Tax Digital (MTD).
Will spreadsheets still be a thing?
Making Tax Digital doesn’t mean you can’t use spreadsheets, but you must ensure your spreadsheet is MTD compatible. That means being able to digitally transfer your VAT calculation from your spreadsheet to what is known as bridging software. The bridging software will then make the submission to HMRC.
How can I transfer data to bridging software?
In the first 12 months of MTD for VAT, HMRC will allow you to manually type in the 9 boxes of the VAT calculation to your bridging software. However, from 1 April 2020, this will need to be an automated process. The bridging software is currently being developed to help manage this process.
Who does this effect?
This will affect businesses that are VAT registered and have an income above the current registration threshold of £85,000 (as of 2018/19), as moving from the current filing process to MTD for VAT will be compulsory. Even if your business earns under the threshold, HMRC is still encouraging you to sign up as they claim it can still be beneficial to your business. The aim of the MTD is to make paying VAT easier and simpler, therefore businesses can get on board and start getting used to it.
Is there an alternative to bridging software?
Some accounting software companies have developed programmes designed for anyone looking for support on how to submit financial documents. They can make it easier for you to deal with your taxes and business finances, taking away the stress.
For example, Go Simple Books have been working closely with HMRC to add MTD for VAT filing and the public beta testing phase is due in late 2018. This will give users time to become acquainted with the regime ready for the start of MTD for VAT in April 2019
More on small business tax and MTD.
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