Making Tax Digital (MTD) – A Huge Change You Need to Know About
Huge changes to how you keep your books and records are coming very soon – take action now !
Making tax digital (MTD) is one of the biggest changes for decades in how we have to keep our books and records.
From April 2019 HMRC will require records of sales, purchases and expenses etc to be kept in electronic format, and VAT returns will have to be filed directly through electronic accounting software.
The existing HMRC website used for filing VAT returns will only be available for those registered for VAT on a voluntary basis (i.e. with turnover under £85,000 per annum). All other VAT returns will have to be filed electronically via 3rd party software.
So what should you be doing ? This depends on your circumstances:-
I am not VAT registered
If this is the case you do not need to be too concerned about MTD just yet. However we would strongly recommend that you seriously consider using an up to date accounting package, such as Xero, because HMRC plan to extend the reach of MTD over the next few years. It will also apply straight away of you exceed the VAT threshold and have to start completing VAT returns. If this happens it would be a big task to start using software immediately.
If you are registered for VAT but have taxable sales of less than £85,000 per annum you wont have to apply the MTD rules yet.
I am VAT registered and currently use software to keep my books
If you are using desktop software, such as Sage/Quickbooks you will need to update this to an MTD compliant version or look to switching to a cloud based accounting system. You will also need to get to a position where you file your VAT returns directly through the software rather than using the HMRC website.
Some upgrades are very costly and we recommend you speak to us before parting with your hard earned cash just to make sure you are getting a good deal.
I am VAT registered and have manual books or use spreadsheets
It is really important that you speak to us now with a view to computerising your accounting systems. This is because it is likely to take some time and effort to implement a new computerised accounting system and you will need to be up and fully running by April 2019.
We have extensive experience in the main accounting systems and can assist you in selecting and implementing the most appropriate one for your circumstances. We are also able to help you set this up, and provide training and support should you need it.
Our preferred solution in most cases is the Xero online accounting system, which we believe is the best cloud based small business accounts system available. We also work with many clients using other systems such as Sage, Quickbooks etc. and have extensive experience in them, so please speak to us for help and advice.
If you prefer not to computerise your bookkeeping we are also able to offer a full bookkeeping and VAT return filing service, using an online accounting system, freeing you up to work on your business rather than worry about the books – please ask us for details. You can still have online access to view the figures, or could still for example do your own sales invoicing but let us do the rest.
The most important thing is to make a start planning for the changes now – please do not leave it until March or April 2019, we expect to be very busy helping clients with these big changes at that time !
Remember we are here to help you !