Making Tax Digital- What do you need to know
For the last couple of years, we are listening to the loud conversation around us about Making Tax Digital or MTD. So what is it? Why everybody is so much interested in this topic. I am sure you either see this term inside the train you travel every day or online. I am also sure most of you already called your accountant to find out about this. I am just trying to give you some basic information to refresh your memory.
The government is trying to make the tax system effective, efficient and easy to understand for all taxpayers. All businesses and individuals can view their overall tax affairs in real-time from a digital tax account. To open a digital tax account please go to: https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat
From 1 April 2019, most of the UK VAT registered businesses (turnover £85,000 and over) have to submit their VAT returns under this system. However, business not registered for VAT and landlords do not have to comply before 1 April 2020 (or maybe later).
Before 1 April 2019, a VAT registered business can complete the 9 boxes software provided by HMRC to submit their VAT return. From 1 April 2019, they need to use software that will transmit data to HMRC’s system. Unfortunately, HMRC is not providing any free MTD compatible software. But they are providing a list of software which can be used for this purpose. You can find this list on https://www.tax.service.gov.uk/making-tax-digital-software
You can still use a spreadsheet to maintain your record but you will need MTD compatible bridging software to send data to HMRC in the format required by them.
The businesses need to keep their records digitally. The minimum data they need to keep for each supplier is the time of supply, the net value of the supply and the rate of VAT charged.
We will come back with more information before MTD is triggering for non-vat registered businesses and landlords. However, if you have any questions about this please do ask us.