5 tips to get your business ready for Making Tax Digital before April 2019
To the thousands of business owners in the UK who submit their own VAT returns get ready for the impact of Making Tax Digital.
Making Tax Digital becomes mandatory on Monday 1 April. It will affect everyone who submits their own returns, so that’s accountants in practice, accountants in business and VAT-registered business owners.
HMRC has claimed digital tax returns will help reduce an 8bn tax gap resulting from avoidable administrative errors. Ahead of the switch, MTDfVAT has produced five top tips on how to best prepare for this revolutionary change within HMRC. It guides smaller businesses on how to get ready and prepare for 1 April 2019. We highlight some key points to consider.
There has been quite a lot of information regarding Making Tax Digital. What we aim to do is make this information more relevant to small business owners like you.
Why the change in the first place?
HMRC feels that Making Tax Digital is a vital part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works transforming tax administration so that it is:
Easier for taxpayers to get their tax right
How are they going to do this?
Well, HMRC is going to restrict the current gateway for those who are mandated.
VAT-registered businesses with a taxable turnover above the 85, 000 VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software (like MTDfVAT) to?submit their VAT returnsfrom 1 April 2019.
The exception to this is a small minority of VAT-registered businesses with more complex requirements. These specific exceptions are listed below:
They will not be able to take part in the pilot now if they:
are part of a VAT Division
are based overseas
are a trust
are a not for profit organisation that is not set up as a company
submit annual returns
make VAT payments on account
As part of planning for the VAT pilot, HMRCcontinued to engage with stakeholders and listen to their concerns about business readiness for Making Tax Digital. HMRC has decided to delay mandation for these customers until 1 October 2019 to ensure there is enough time to test the service with them in the pilot before they are mandated to join.
Five top tips to help your business get ready for Making Tax Digital (MTD)
Knowledge is power
Make sure that you keep up to date with the process of MTD. It’s not a complicated one to explain, but it can be daunting at first if you don’t know about anything about it.
Register as a client
As a business, you need to set up a Client Services account to be able to register and set yourself up. Once you are signed up to HMRC’s pilot, as you will become more familiar with the process. You can sign up here.
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