Managing UK tax affairs is changing for businesses, accountants and bookkeepers. From April 2019, digital tax management is becoming mandatory for VAT-registered businesses whose turnover exceeds the registration threshold.
While this deadline may seem a little while away, it is essential that firms start preparing now. This will ensure that businesses are able to fully comply with the new rules from the start and avoid potential fines for filing returns incorrectly
So, what is Making Tax Digital (MTD) and how can you make sure your business is prepared?
MTD is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. From April 1, 2019 businesses with a taxable turnover above the VAT threshold of £85,000 will have to comply with new guidelines. These require tax returns to be submitted digitally using “functional compatible software”.
Accordingly the first thing to establish is if your organisation is using anonline accounting package which is deemed functional for MTD. HMRC provides a list of suitable software suppliers on its website of which Xero, our preferred solution, is one.
While it is not yet compulsory for them, businesses with a turnover below the current threshold may also opt to file VAT returns through MTD. This may prove worthwhile, as it is expected that compulsory MTD will be rolled out to all businesses by April 2020. It is therefore important, even for smaller businesses, to start thinking about making the switch to online accounting software if they have not done so already.
To ensure peace of mind, speak to a third-party advisor, such as Naylor Accountancy. We are a Xero Gold partner and can help you make the switch and ensure your business is compliant ahead of the April 2019 deadline.
For more information call us on 01892 807001 or email: firstname.lastname@example.org.