For those unaware, Making Tax Digital (MTD) is the largest piece of tax legislation that has been written in years and it has far-reaching consequences for UK businesses.
Its premise is that accounting/bookkeeping should be done in a more “real-time” manner.
The first step of this will affect VAT returns from April 2019 onwards, and we can expect more legislation to follow that will impact later tax years.
Now you’re probably thinking: “Well how will this affect me?”
All VAT registered businesses that have ever met or exceeded the £85,000 “Annual Taxable Turnover” threshold will be required to submit their VAT returns online, as well as keep digital records of all transactions. This will require the use of commercial software which can “digitally link” all of the data used to calculate and submit your VAT returns.
If you do your own VAT submissions, then this software is an investment that you will have to make in order to continue this practice going forward. You will also need to be open to reviewing your processes to ensure that you comply with every rule included in the legislation. It is quite possible that paying an accountant’s fee and offloading this work to them will be the more logical option.
However, if you already use the services of an accountant, MTD could still affect the processes that you currently have in place to produce your VAT returns. It is therefore important that you are maintaining an awareness of changes your accountant or bookkeeper might be making in the coming months that could affect you.
For example, if you do your own bookkeeping, but use an accountant to submit your VAT returns, you may need to meet your accountant to confirm that your handover process will abide by the new regulations regarding “Digital Linking”.
To ensure that you are fully aware of the rules surrounding MTD, we would suggest you read the gov.uk article linked below:
Changes to the day-to-day processes in a business can take a long time to implement, so it would be advantageous to start making yourself familiar with MTD and its implications well in advance of the April 2019 start date.
For help with any of your accounting or business advisory needs, please contact Stack & Jones Accountants on 01869 277973 for a free 1-hour consultation.
Sources: gov.uk, Sage