By April ’19 businesses with taxable turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using ‘functional compatible software’. This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’. This must be capable of:
- keeping records in digital form as specified by the new rules
- preserving digital records in digital form
- creating a VAT return from the digital records held in compatible software and submitting this data to HMRC digitally
- providing HMRC with VAT data on a voluntary basis
- receiving, via the API platform, information from HMRC to ascertain compliance.
Spreadsheets & incompatible software packages are initially permitted for keeping records, but must be used in association with ‘bridging’ software that will submit the required information to HMRC in the correct digital format.
We recommend that you take the following to steps to ensure you are ready for Making Tax Digital:
- establish if the April ’19 deadline applies to your business
- assess whether your current accounting system is compatible for MTD
One of the easiest ways of making sure you comply with HMRC’s MTD regime is to consider keeping your business accounting records digitally on cloud accounting software. There are several advantages to this –
- as your records are held online, you can access them anywhere at any time and on any device
- you can see a clear picture of your financial position in real-time & access a wealth of financial reports
- you can create & send digital invoices on the go, meaning your customers receive them in an instant
- you can get daily bank feeds sent directly to your software
- the reassurance of MTD compatible filing that matches HMRC requirements
- you can post expenses from photos of your receipts on your phone
How we can help
- we can provide digital software packages
- we can offer training & advice on XERO and Kashflow software packages
- we can offer bespoke bookkeeping & VAT services
- we can offer VAT filing for those on spreadsheet or non-MTD compatible software.
Please contact us for more information.
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