After a few delays the first wave of Making Tax Digital (MTD) starts with VAT from 1 April 2019. The first phase affects those above the VAT threshold of £85,000.
Making Tax Digital is HMRC’s plan to make all tax returns digital – to help make sure more people get their tax right.
From 1 April 2019, HMRC will require you to submit VAT returns using accounting software. This means you’ll no longer be able to submit manually through the HMRC gateway.
We’ve put together some Frequently Asked Questions.
What does MTD for VAT mean for me?
+If it applies to you then you’ll have to keep your records and submit your VAT returns using appropriate software. You won’t be able to submit using the HMRC login. We suggest using Xero.
Will there be free software?
+Nope. HMRC have said they won’t be providing free software.
You do my VAT returns so do I need worry?
+No. If we do your VAT for you then we’ll be using Xero (if we’re not already)
April 2019 is ages away. I’ll worry about it then, right?
+Er, not really. MTD for VAT could mean a whole new accounting system for you. Although it’s possible to introduce a new system in the middle of the year it’s far easy (and cheaper!) to do it at your year end. So, if your year end is 30 September 2018 then you’d want to be starting your new accounting year with the software you’ll be using when MTD for VAT starts in April 2019.
Even if your year end is March 2019 then you need to make sure you’ve got a plan in place well before so you can be up and running on 1 April 2019.
I’m already using Xero. Do I need to worry?
+No. Xero will be fully compliant so you’ve nothing to worry about. Give yourself a pat on the back!
I use an old version of Sage I ‘borrowed’. Will that be ok?
+No. Sage will fine for MTD for VAT returns but you’ll need to make sure you’re on the latest version. Lots of our clients have moved away from Sage so MTD is a great time to review whether your accounting system is still right for you.
