Making Tax Digital – An Update

As per our previous article in April, Making Tax Digital (MTD) is HMRC’s move to digitise tax. This means that as of 1st April 2019, UK businesses above the VAT threshold of £85,000 will be required to submit VAT returns using accounting software, where you’ll no longer be able to submit manually through the HMRC gateway. The situation with regard to both HMRC and Sage is now a little clearer and we are thus able to provide additional information.

What does this mean for you?

If you are a VAT registered business with a turnover of over £85,000, then from April 2019 you will need to, by law 1) Keep financial records digitally and 2) Submit your VAT return to HMRC with MTD compatible software

It’s not all bad!

The whole point of the legislation is to make the process easier for individuals and businesses when it comes to uploading their VAT information to HMRC. The significant benefits to note are:

• One single view of all your tax information
• Real-time view of your Tax position
• No more “surprise” Tax bills
• More accurate and timely processing
• Reduction in opportunity for error and subsequent lost time to investigate & fix

What can you do to get your business ready for MTD?

Sage has been working closely with HMRC to prepare for the introduction of Making Tax Digital. If you’re currently submitting through Sage software, compliance could be as simple as installing the latest update. If you don’t process VAT through Sage software, we can discuss the options for your business.

Sage 200 and MTD

The latest release of Sage 200 (April 2018) is MTD ready and can enable the submission of VAT returns to HMRC through the software ahead of the mandate. However, we understand that many of our clients are on a previous version of the software and may not be ready to upgrade to the latest version at this moment in time.

With this in mind, Sage has created an MTD submissions module to enable you to remain compliant with MTD, whilst on a previous version. To remain compliant, you must have the module installed with your current Sage 200 software before April 2019.

Smith Cooper will be contacting our clients individually very shortly to discuss the best option for them.