Making Tax Digital

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Making Tax Digital

Making Tax Digital Comes into Effect 1st April 2019

Many UK businesses will need to change how they prepare and file VAT Returns as HMRC’s online VAT portal will close from 1st April 2019 and VAT Returns will instead need to be submitted to HMRC through Making Tax Digital (MTD) software.

Frequently Asked Questions

When does Making Tax digital start?
Making Tax Digital for VAT starts from 1st April 2019. Any VAT returns that begin on or after this date must follow the Making Tax Digital rules.

Who does Making Tax Digital for VAT impact?
It impacts VAT registered businesses with a taxable turnover above the VAT threshold (currently £85,000) in the 12 months leading up to 1st April 2019 or any 12 month period thereafter.

Who is not impacted by Making Tax Digital for VAT?
Making Tax Digital for VAT does not impact businesses who meet one or more of the following criteria:
o Businesses who are exempt from online VAT submissions
o Businesses who are not VAT registered
o Businesses with a taxable turnover below the VAT threshold in the 12 months leading up to 1st April 2019 or any 12 month period (so long as they deregister from VAT)

How to comply with Making Tax Digital for VAT
To comply with Making Tax Digital for VAT you will need to do all of the following by 1st April 2019:
o Keep your VAT records digitally
o Submit your VAT return to HMRC through MTD compliant software
You must also do the following by 1st April 2020:
o Digitally link software you use for VAT preparation and filing if you use more than one software solution.

My VAT returns are already submitted online, am I not already compliant?
Unless your VAT returns are being submitted through software that has been approved by HMRC as being Making Tax Digital compliant then you are not already compliant. From 1st April 2019, the HMRC web page used by businesses and their accountants to submit VAT returns will be closed to those required to comply with Making Tax Digital.

Where do I get Making Tax Digital (MTD) software?
A list is available on GOV.UK. HMRC are not offering Making Tax Digital software. It is worth checking the version of accountancy software you currently use is compliant.

How can my accountant help me with Making Tax Digital?
Accountants can support you through Making Tax Digital so long as they have the following:
o Permission from you to act as an agent on your behalf for VAT
o Registered for an Agent Services Account and linked your HMRC account to it
o Access to Making Tax Digital compliant software

Why is Making Tax Digital happening?
Making Tax Digital is HMRC’s attempt to transform the UK tax system into one of the most digitally advanced in the world for the benefit of individual and business tax payers. There are four main benefits:
o Digitalisation will improve the quality of record keeping
o Less manual entry should mean fewer errors
o Managing business affairs will become more efficient – especially if you adopt a cloud-based solution which can be accessed anywhere
o You’ll spend less time gathering and inputting data

Contact the Blue Sky Accountancy Service team to find out how we can help you.