Here are some tips to ensure that you and your business remain compliant while Making Tax Digital is being brought in.
What Is Making Tax Digital?
HMRC aims to become a world leader when it comes to digital tax administrations. Making Tax Digital is among the first procedures to be implemented while aiming towards this goal.
Who Does It Affect?
SMEs (plus VAT-registered sole traders) will be hardest hit. In addition, people who have kept manual records until now will be affected.
Making Tax Digital is relevant to VAT-registered people whose taxable turnover is over £85,000 for the year-long period ending 31 March 2019 and each 12-month period following this date.
If you meet the criteria, you are requested to keep digital business records. Your VAT returns should be sent to HMRC via Making Tax Digital-compatible software.
VAT-registered businesses whose turnover is below the VAT threshold can continue to keep their accounting records and submit their VAT returns as they do presently, up until at least 2020.
Those businesses which are more complex will have a six-month deferral to the start of the scheme.
Where to Begin?
First, you will have to register through the current Government Gateway account for Making Tax Digital. Remember to factor in time for the activation code to be posted to you.
When your first return is due will depend on your VAT quarters. The first return will take place on the first complete quarter that occurs after 1 April 2019. If you have a VAT quarter from January to March, the first return that needs to be filed will be the April to June 2019 return, with a deadline for filing of 7 June 2019.
If you have February to April 2019 quarters, the May to July 2019 return will have to be filed under Making Tax Digital, covering the first whole quarter that occurs after 1 April 2019.
If you are investigating the accountants Cheltenham offers, you will find that Randall and Payne are accountants in Cheltenham.
The government’s introduction to digital tax is here: https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital.
Choosing the Right Software
How an organisation chooses their Making Tax Digital-compatible software depends on their current accounting systems. Various accounting software providers are HMRC-approved, and some supply discounts to encourage sole traders and companies to sign up.