Making Tax Digital

Making Tax Digital (MTD) is a HMRC initiative to digitalise the UK tax system. Businesses and landlords will be required to use software to maintain their records and update HMRC quarterly, starting with VAT.

Under MTD, businesses above the VAT threshold will be required to keep records digitally and provide HMRC with quarterly VAT updates from the beginning of their first VAT quarter starting on or after 1st April 2019.

Quarterly reporting for MTD is already mandatory for most VAT registered businesses. Although 99% of VAT returns are filed online, only around 12% are currently filed via software. The majority of returns are therefore (presumably) manually entered onto the government gateway page and submitted to HMRC - requiring manual input and intervention. Under MTD, businesses will not be able to keep manual records.

Currently spreadsheets are commonly used - not only to maintain records, but also to covert the information from accounting software into the VAT return figures. MTD requires spreadsheets to interact directly with software. Overcoming these issues may be challenging for businesses.

How can we help?

We recommend that businesses and landlords, especially those using paper records or spreadsheets consider switching to cloud accounting software. Our preferred platforms Xero and Quickbooks online are MTD ready, and we hold their MTD Ready Certification meaning we are well equipped to migrate your business, and ensure you are MTD compliant. Not only will cloud accounting software the perfect solution for MTD, it also has many more business benefits, you can find out more here, or contact us to discuss MTD and your business further.