HM Revenue and Customs (“HMRC”) have today published further information on Making Tax Digital (“MTD”) which comes into effect on 1 April 2019.
It will affect all VAT registered businesses trading above the £85,000 annual threshold.
New legislation is to be introduced to require VAT records to be kept in digital format and for VAT returns to be filed electronically via ‘functional compatible software’.
What does this mean for businesses?
In practice this means businesses must have software capable of providing VAT information to HMRC and receiving information from HMRC digitally via HMRC’s Application Programming Interface (“API”) platform.
Business records can be kept in a range of compatible digital formats (including spreadsheets) but there must be a digital link between all the different software used.
How can businesses prepare?
With little more than eight months to go before its introduction, businesses need to consider the implications of this change now.
For larger businesses they should already be discussing this with their internal IT departments. Smaller businesses may need to consider what additional software support is required.
Firms of accountants, tax advisors, bookkeepers and tax agents, whose services include the preparation and submission of their client’s VAT returns, will be significantly affected by MTD. They will need to sign up to a new Agent Service Account in order to continue acting under MTD for their clients.
HMRC has today published further information around the requirements including a communications pack, a list of software developers and clarification on the rules - you can find these resources here
If you have any queries on MTD and what it means for your business, please contact Alan Pearce