Professional Business Support, Accounting, MTD System, Taxation, Business Start Ups, VAT Advice
Making Tax Digital, otherwise known as the MTD system will come into effect on 1st April 2019, and will change the way that small VAT registered businesses submit their records. Most small businesses currently keep manual records or use software such as excel, submitting their VAT return online annually. From April 2019, these businesses will be required to provide more detailed information electronically. This represents a big adjustment for businesses, who will have to keep their records in a certain way and use a particular software.
It is estimated that a large percentage of the millions of small businesses within the UK who do not use specialised accounting software may struggle. The MTD system will bring major changes to all businesses regardless of whether they are sole traders, partnerships or limited companies. One aspect of the system is that financial submissions will be required quarterly as opposed to annually.
The system was originally earmarked to begin in April 2018, but was delayed until 2020 in response to calls from businesses and accountants for more details, and time to prepare. As the changes are seen as inevitable, it is wise to review your existing accounting methods sooner rather than later.
The changes will affect VAT registered businesses who will need to make their VAT submissions quarterly from April 2019. Self employed, partnerships and landlords with turnover above the VAT threshold will report income tax quarterly from April 2020 [those under the VAT threshold are not required to but may do so voluntarily]. Companies paying corporation tax will also report quarterly from April 2020.
The basis of the change is to ensure that everybody is using the same ‘functional compatible software’. These software programs must be able to:-
record and preserve electronic records in an electronic form
provide information and returns to HMRC from the electronic records using an electronic API [Application Programming Interface] platform
receive information from HMRC
For more information contact John S Culwick on 01268 680702.