What is “Making Tax Digital”?
The digitisation involves the capturing of all transactions in record keeping software as near to real time as possible via any device (computer/smart phone or tablet) and enabling the transmission to HMRC via “Application programming interface” (API) enabled software.
How we can help: Contact us now on 01646 698869 to help ensure you are MTD compliant
What is changing on 1 April 2019?
The first stage of MTD is to complete VAT submissions by pulling data direct from digital records. The fundamental change is that the current VAT portal will be largely replaced by submitting VAT returns direct to HMRC via API enabled products.
How we can help: Contact us now on 01646 698869 to get advice on suitable API enabled products
The main VAT aspects will not change. The information submitted in the 9 boxes of the VAT return remains the same. The VAT return and frequency of the returns remains the same. The eligibility for special schemes, flat rate and annual returns remains the same.
How we can help: Contact us now to get advice on special schemes which may be appropriate to you
The changes in April 2019 affect VAT registered businesses with a taxable turnover above the VAT threshold. Qualifying businesses must then keep their VAT records digitally and submit their VAT returns through compatible software.
How we can help: Contact us now to get advice on what income is not included within taxable turnover
What exemptions apply to MTD?
HMRC recognise certain exempt categories for which exemption from MTD may be applied. These exemptions include business insolvency, religious grounds for practising members of a religious society whose religious beliefs prevent them from using computers, and where it is not reasonably practicable.
How we can help: Contact us now to get advice on where it is not reasonably practical. Where businesses are in remote locations, where business operators are disabled or impractical due to age or infirmity, then businesses can apply for their case to be heard on its merits
What is digital record keeping
Digital record keeping uses MTD compatible software to keep the records digitally, calculate the return and then submit it to HMRC via an API. This digitally maintained data records the designatory date of the business name, address, VAT registration number and records of the VAT accounting scheme.
How we can help: Contact us now to get advice on what VAT accounting schemes are available and relevant to your business
The digital records for each sale or purchase are required to record the time, value of the supply, and the rate charged on that supply. A sale must separately record the outputs between those made at standard, reduced, zero, exempt and out of scope supply. Each purchase must record not only the time of the supply but also its value, the VAT claimed, and if more than one supply is on an invoice then the records of the totals of the invoice. Adjustments made within the software are to be recorded in summary.
How we can help: Contact us now to get advice on how adjustments are to be made and recorded for fuel-scale adjustments, partial VAT and annual adjustments for exempt transactions, and such other adjustments required for the proper accounting of VAT.
Functional compatible software
The features of such approved software comprise a program or set of compatible programs that keep digital records, provide HMRC with information and returns using APIs, and receive information from HMRC.
Where there is more than one piece of software involved then there must be a digital link between the pieces of software.
How we can help: Contact us now to get advice on how to use bridging software if you wish to spreadsheets to record your transactions, or if you amalgamate VAT records in a VAT group