Making Tax Digital (MTD) has been at the forefront of many business owner’s minds over the past two years. HMRC has delayed the roll-out of MTD in the past, however, VAT registered businesses who exceed the threshold set by HMRC should have already transitioned to cloud-based software.
What is MTD
Making Tax Digital is a change introduced by HMRC which looks to modernise the UK tax system. It not only looks to ensure that the UK tax system is user friendly but also provides relevant information in relation to taxes. The main benefit of MTD is to look to move businesses over to the digital world, as such using cloud-based software to digitally store records capturing information reliably.
Under MTD rules, records must be retained digitally under compatible software for up to six years. The compatible software should be able to store records in a digital format, generate VAT returns and receive information HMRC through a valid API platform.
HMRC is looking to transition Income Tax and Corporation Tax over to MTD in due course, so it’s paramount for business owners to start planning from now.
What does this mean for you and your business?
Currently, UK businesses that have a taxable turnover over the VAT threshold of £85,000 should have already transitioned to MTD, as such should be using compliant software.
Filing of non-MTD VAT returns
It was recently announced by HMRC that non-MTD VAT submissions would no longer be accepted after April 2021, as a result, a few software providers for VAT submissions will no longer be supported. If you haven’t exceeded the threshold in the past and your VAT quarter end falls after December 2020, January 2021, or February 2021, this will be the last VAT returns that can be submitted through your current software. VAT returns after this date will need to be transitioned across to cloud-based HMRC approved software.
How can Fusion Accountancy help?
The transition shouldn’t be viewed as daunting. At Fusion Accountancy we have helped several clients make the transition to MTD returns using Xero cloud-based software. Xero is our preferred partner due to its functionality– it is also an approved software with HMRC. Our expert team is Xero migration qualified, and we can offer our clients a smooth transition from their current software provider to Xero.
Businesses should start preparing for MTD from now. Whilst there is still some time before business owners will no longer be able to submit non-MTD VAT returns, it’s always a good idea to start preparing early for this transition.
Get in touch with our team HERE, on ways in which we can not only help this transition but help you with your accounting and tax needs.