Get Ready For Making Tax Digital
Making Tax Digital - your questions answered
What is Making Tax Digital?
Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. VAT-registered businesses above the threshold of £85k will have to keep digital records and submit their VAT returns using MTD-compatible software. Making Tax Digital for business (MTD) begins on 1 April 2019 with MTD for VAT.
How will MTD impact my business?
Change can often seem daunting, especially if it requires you to adopt new technology. Don’t regard Making Tax Digital as just another obligation. This is your opportunity to streamline your accounting and business management. Keeping records and filing tax digitally gives you the chance to regularly check income, expenses and profit in your business – which will help you to make better decisions.
What will I need to do to stay MTD compliant?
Despite all the recent confusion surrounding MTD, it’s not as scary as it sounds. All you (or your accountant) need to do is record your taxable records and submit your VAT returns through MTD-compatible software – like Xero.
Where can I go for more information?
HMRC has published a VAT Notice – VAT Notice 700/22 Making Tax Digital for VAT – with complete details about MTD for VAT, including several examples and scenarios. We’ve also created useful content to help you throughout the transition.
How do I know if my software will be compliant?
HMRC publishes a list of compliant software products. We’re proud to be on the list. It’s just one part of our commitment to support small businesses and their advisors through the transition and beyond.
What if I’m not using Making Tax Digital for VAT compliant software?
If you’re using software that is not MTD for VAT compliant, you have two options:
Move to MTD for VAT-compliant software. This is something we can help you with. Contact us for details.
Use a bridging software product to submit your MTD for VAT return for you. Of course, using Xero means enjoying more online accounting benefits sooner – and not just for MTD for VAT.
What digital records do I need to keep?
HMRC has ruled that the following must be kept digitally in order to comply with MTD for VAT:
Business name and contact details
VAT number and scheme used
VAT on supplies made and received
Time of supply or receipt
Net value (excluding VAT)
Rate of VAT charged or that you will claim back
Daily Gross Takings (DGT) - retail scheme users only
Value of sales made
Total output tax on purchases