Making Tax Digital is finally here. It became mandatory from 1 April 2019 for most VAT-registered businesses with annual sales over £85,000.
But, what do you need to know? Or do? Take a look at our handy video or read about it below.
Here are our top tips for getting ready for Making Tax Digital.
Understand the deadline for going digital
If you’re a VAT-registered business with annual sales over £85,000, you’ll have to use Making Tax Digital from 1 April 2019.
What this actually means is that your first VAT return for the quarter that starts after April 2019 will be submitted via Making Tax Digital.
So if, for example, your quarters end on 30 April and 31 July, it will be the 31 July VAT return that must be submitted via MTD.
If you’re not VAT registered, or even if you are VAT registered with sales less than £85,000, you don’t need to go digital yet. It will be coming, but the exact timescale hasn’t yet been confirmed.
And for those who must comply, it’s only VAT returns in 2019. Corporation Tax and Income Tax will follow in 2020.
Find the right software
The whole point of Making Tax Digital is that you will have to use HMRC compliant software to submit your returns.
According to HMRC recently, only about 12% of VAT returns are currently filed using software. That means that, of the 2.1 million VAT registered businesses, over 1.9 million aren’t using software that will be compliant for Making Tax Digital.
So, if you are about to leap into the digital and find some software, you need to look at your alternatives. You can get a list of all the compliant software from the Gov.UK website.
But there’s a lot of solutions out there, so do take a look, and find the best one for you.
At this point it’s probably worth speaking to an expert. For example, an accountant who uses digital software.
Start to move your records to digital
The next thing is actually to start the move across.
It does make sense to do this in advance of the first time you need to do it legally, just to make sure that you’ve got all the little teething problems out of the way.
You might also pick a date that is more suitable to you. For example, your accounting year end, just so you actually pick a definite point to move across.
What is key, though, is the date you move across must of course include the first date of that first VAT return that you’re going to be filing and Making Tax Digital.
View it as a benefit
The next tip really is to embrace it. It may actually be forced upon you, but actually there are loads of benefits of using digital software.
We’ve used cloud or digital software for a number of years now, and our clients love it. At first, they might think “It’s different to Excel or paper or desktop software” but, once they use it, they see there’s so many benefits.
So, what are the benefits of cloud software? Well, the first one is just that – the fact that it is in the cloud. That means you can access it from anywhere where you have the internet, whether that’s on PC laptop, a tablet, or phone. It’s not just stuck on one desktop.
That also means that your team can access it if you allow them to and, importantly, your accountant. If you are working and liaising with your accountant, you’d be looking at the same screen at the same time.
All in all, cloud software also helps you keep on top of your numbers in real time.
And cloud software saves you lots of time – it can speak to your bank account, and automatically download all of your bank statements. And, in terms of purchase invoices, most of the digital software allows you to just take photos of purchase invoices, and then automatically analyses them into your accounts, and into your tax return. You’ll never have to spend time typing again!
Also, the security of cloud software is really good. Think of it like using online banking and everything’s backed up securely.
So, it’s absolutely secure, it saves you time, makes things easier, and gives you your numbers in real time, as well as getting you ready for Making Tax Digital. So, don’t see it as a hassle – see it as benefit!
Do you want to know more?
You can also take a look at some more of our videos and blogs in the Making Tax Digital section of our Knowledge Centre
How Can We Help?
We are Liverpool’s Making Tax Digital experts. We’ve spent the last few years working with cloud software and we know it inside out, so our clients are all 100% ready for Making Tax Digital.
We know exactly what you need to do, and we can help you get there. So, if you need more information or guidance then we would be happy to sit down and have a meeting with you so that you know what you need to do.
If you’d like to meet, please ring us on 0151 380 8080 or email us at email@example.com . We look forward to hearing from you.