MTD – making sure you’re VAT compliant
Hopefully you will have already read our blog on HMRC’s flagship initiative – Making Tax Digital (MTD). The first stage of this initiative covers VAT reporting.
From April 2019, VAT registered businesses with turnover greater than the threshold or those that have registered voluntarily will need to keep digital records for VAT and submit VAT returns using MTD compatible digital systems.
Lisa Wilson, Partner and Head of Tax at Cowgills, explains further, and highlights why all VAT registered businesses should be talking to their advisers now to ensure they will be ‘MTD ready’ by 1 April 2019.
I already submit my quarterly returns online – does this make me MTD compliant?
For a long time businesses have been required to file quarterly VAT returns electronically to HMRC and whilst 99% of VAT returns are currently filed online, only 15% are submitted via MTD compatible software.
What this means is that whilst the majority of businesses are using the Government gateway service to file VAT returns, they are manually uploading the information.
If your business is filing VAT returns in this way then ‘NO, you are not MTD compliant’ and more alarmingly the ability to manually upload information in this manner will cease to be available from April 2019. This will obviously be a significant issue for the majority of businesses when MTD comes into force.
A recent survey of 1,100 businesses by the British Chambers of Commerce survey, found a “widespread lack of awareness among business communities about the switch to a new digitised system.”
Worryingly, the survey found that 24% of firms have no knowledge of MTD whatsoever, while a further 66% either had only a basic knowledge, or recognised the name.
Of those businesses which are aware of MTD, very few are MTD ready. According to the report, just 25% of those firms who know ‘a lot of details’ about MTD, have made plans for its implementation.
Lisa commented ‘April 2019 is fast approaching, and it is worrying that such a large number of businesses are not preparing for the new regulations.
‘Keeping records digitally can have a wide range of other benefits for businesses and we work closely with business owners to find the software solution which works best for them.’
If you are not talking to your accountant about MTD, now is the time to do so.
To discuss this or any other aspect relating to your small business finances contact the team at Cowgills on 01204 414243, or via our contact page.
The information was correct at time of publishing but may now be out of date.