For any UK business, one of the biggest changes to taxation in modern times is coming. It’s known as Making Tax Digital. While there is much talk of the much-discussed ‘MTD’ platform being delayed in its release, an April 2019 starting time for some businesses still stands in place. This is a major issue, and you should look to make some changes to the way that you work with regards to taxation.
The first thing that you need to do is understand the implications of MTD for VAT. Why does this new system matter?
VAT Registered businesses will start earlier
As of April 2019, you will be expected to be involved in using the MTD system if you are engaging in the VAT threshold of £85,000. Therefore, if your business is presently in the taxable turnover above the VAT threshold above, it is likely that you will need to start taking part in the use of this system as of April 2019.
However, some business models and industries could be exempt from starting in April 2019. We recommend that you contact the Government to find out: the industry list of exceptions is not fully known at this moment in time.
What does MTD for VAT mean for me?
First off, you will have to start keeping a much clearer account of all of your records. For one, you need to start making use of MTD compliant accountancy software. If the software system that you use today is not MTD-compliant, then you could have an issue. It might mean that you have to make a change if they will not adjust or modify their system: MTD compliancy is an absolute necessity if you wish to move forward.
You will also need to stop keeping everything purely on paper. Many businesses do this, but soon you will be expected to have a digital copy. By all means, keep the paper for your own records and reference: but it no longer will be enough.
For those who are not tech savvy, this will natural sound quite scary. Also the fact you will now need to start submitting your tax returns using the required software is quite a worry. If you are someone who is worried about this, we recommend that you first look to find affordable and reliable MTD compliant software or your books.
This might seem quite worrying at first, but professional expertise can help you to handle the issue with (relative) ease. You need to first look to find some software which you can use that backs the new government policies, though.
First off, contact the accountancy software that you use and find out if they will be making the change that they need. If they are not making the upgrade or cannot give you a straight answer, it is important to make a change now.
With the deadline for certain businesses now only months away, moving quickly is very important to ensure you meet compliance standards.