Making Tax Digital comes into place on 1st April 2019. This means if your business has a taxable turnover above the VAT registration threshold of £85,000, you will need to keep VAT records digitally and provide quarterly updates to HMRC using MTD compatible software. You will be required to do this from your first VAT period starting on or after 1st April 2019.
Is my software compatible?
The biggest question many businesses have regarding Making Tax Digital is “Will my existing software work or do I need to upgrade / buy something else?”
The good news is that if you are currently using one of the major cloud based accounting packages such as Xero, Sage or FreeAgent, your software is already compatible.
You may however, need to change the way you submit returns so it could be time to review the training material for each on how to go about sending your VAT returns via your software.
What are the penalties
From April 2019, subject to the implementation of a potential grace period, if businesses fail to comply, they will attract ‘points’ and penalties in line with the Government’s new two-tier ‘points-based’ penalties regime. The proposed regime for businesses and individuals will be enforced within 15 days of an overdue tax payment. However, there may be an initial grace period for late filers still getting to grips with the new digital system.
As April 2019 grows closer we’ll be producing regular updates on MTD, so make sure you follow us on social media and check the website regularly.