Making Tax Digital (MTD) for VAT is just six months away, yet recent research by the Institute of Chartered Accountants in England and Wales (ICAEW) revealed that more than 40% of the businesses that will experience effects are still unaware of this.
On 13th July 2017, an announcement proclaimed that all businesses that registered for VAT and have a taxable annual turnover that exceeds the threshold of £85,000 must keep digital business records, and they must file their VAT returns to HMRC via MTD compatible software. Many businesses will have to radically change their bookkeeping. as just 54% of VAT registered businesses at present use accounting software.
Many businesses still type their VAT figures directly into a form provided on the UK Government’s website. However, from April of next year, that form will no longer be available, and businesses will have to use accounting software to submit their VAT returns.
To comply with MTD, businesses do not need to keep any additional information. The only process that will change is how they submit the information to HMRC. For those businesses who already use accounting software, preparing for MTD is simply a matter of checking that their provider has plans to make their software MTD-compliant.
Businesses that have to buy software need to find the right type to provide the details that MTD needs. Later this year, HMRC intends to publish details of available VAT software.
Digital records can be in various formats and places, provided that businesses record, consolidate and submit them to HMRC digitally. Businesses will have until 31st March 2020 to provide digital links between their software products. Prior to this date, copying and pasting will be acceptable.