What is MTD?
The way we file returns is changing. Following the advent of cloud accounting, HMRC is working to completely overhaul the process to make things more transparent for you.
You will no longer be able to submit documents using the HMRC website. Instead, tax returns must be submitted digitally through MTD-compliant software.
But it doesn’t stop there, as MTD affects how you run your business digitally too. As such, all business transactions will have to be recorded digitally using MTD-compliant software as well.
The good news is that this initiative is being rolled out in stages, but may apply to you sooner than others depending on your circumstances.
We’ve also compiled a list of FAQs from businesses like yours so that you have everything you need to know going forward!
The Making Tax Digital timeline
See how Making Tax Digital will affect you over the coming years
Part 1: April 2019
Who’s affected? VAT registered businesses with turnover above the VAT threshold (currently £85,000).
How? You’ll be required to use MTD-compliant software to keep a digital record of your business transactions and then submit the VAT return, instead of submitting via the HMRC website. If your business is eligible, this isn’t required until October 2019.
Part 2: April 2020
Who’s affected? Everyone else who is vat
registered i.e. under the VAT threshold.
How? Just like those over the VAT threshold, you’ll no longer be able to submit your VAT returns via the HMRC website and instead will have to use a new, MTD-compliant system.
Part 3: April 2020 onwards
Who’s affected? Sole-traders, partnerships, landlords and trading companies.
How? Whilst the exact start date is yet to be confirmed, it is suspected that you will be required to submit quarterly reports to HMRC for both income and corporation tax purposes.
How does Making Tax Digital benefit me?
For us, MTD isn’t simply about moving to digital systems. It’s an opportunity for reviewing how you work with us now, and looking at improvements that can be made if your records are kept in real time.
For example, one advantage is that you’ll be able to see instantaneous profit figures so that you can make faster, more informed business decisions.
Not only that, but we will be able to access your records any time to give you more timely advice.
Perhaps a bigger benefit to everyone, including the planet(!) is no more paper. Instead, you’ll be able to simply take a photo of receipts that are then digitally stored, so you can throw the paper version away.
In any case, it’s a chance to move towards being more efficient, timely and informed when it comes to your business’ numbers, which could very well be something that transforms your business long-term!