The first phase of Making Tax Digital will go live in April 2019. MTD is bringing the biggest change to the UK tax system since the introduction of Self-Assessment. From 1 April 2019, VAT registered businesses with taxable turnover above £85.000 will be required to move to MTD, keeping their business records digitally and filing their VAT returns using HMRC recognised compliant software.
The risk of penalties increases when a new system of regulations is introduced. For an accountant knowing the pitfalls, you will be able to miss the landmines and introduce your clients to the new way of working without too much disruption.
1. VAT Registered Businesses are Required to Keep Records in a Digital Format
Despite many businesses keeping their business records digitally, many smaller businesses are probably still using the “shoebox” method of storage. When tax returns were to be filed previously, the business owner or his agent (accountant) would log onto HMRC’s portal and transcribe the “boxes”.
This form of working is now not acceptable and these types of businesses need to move to compliant software to store their business records
2. VAT Returns must be Submitted via Software
HMRC’s online submission portal is now not an acceptable way of submitting VAT for the majority of MTD for VAT registered businesses (certain organisations like the NHS get a free pass). Starting from April 2019 all non-exempted businesses that currently use the HMRC online portal will have to submit VAT returns via MTD-compliant software or ask their accountant or bookkeeper to do so on their behalf. Once again this must be MTD compliant and HMRC recognised software.
3. Excel to the Rescue?
A very great majority of businesses still use a spreadsheet as their accounting or bookkeeping system and take their figures from there. HMRC has acknowledged that and has instigated a “soft landing” of MTD allowing the use of a spreadsheet and so called “bridging software” to submit the spreadsheet data to HMRC digitally.
4. Provide HMRC with VAT Data on a Voluntary Basis
The calculations (audit trail in accounting terminology) that make up the VAT return can be submitted to HMRC voluntarily, as part of the VAT submission. This could entail extra work but can save lots of time in the future by allowing HMRC remotely inspect the VAT submission without extra information or even a visit. This part of the MTD is not yet activated “automatically” but will need to be part of any compliant software in the future.
5. ExpressVAT is Making Tax Easy
ExpressVAT is a secure and intuitive app for small businesses. The ExpressVAT App is fully MTD for VAT compliant and makes it easy for a business owner to keep all their records in an approved format. The business transactions and photos of receipts are converted and stored digitally then preserved on Amazon servers in an MTD compliant form.
With the ExpressVAT App, everything needed to submit VAT returns is on your smartphone. Track your expenses, purchases, sales and then easily submit your VAT return directly from your mobile device.
MTD compliance is a requirement and ExpressVAT gives your small business solution for just £6.99 a month (including VAT).
The simplicity of the App removes the burden of totalling figures. Just enter the numbers and ExpressVAT does the rest. No other software or computer is needed. No spreadsheets, Bridging software, accounting software – everything is “In the Palm of Your Hand”.
