Following the announcement of the Government’s Making Tax Digital Initiative, all UK businesses will now have to submit allof their financial updates to the HMRC digitally, using recognised and approved accounting software.
From the 1st of April 2019, when the MTD regulations come into force, all records will also need to be stored in a digital format and every business with a taxable turnover over the VAT threshold will be required by law to store and submit all of their financial records digitally.
The current VAT registration threshold for VAT in the UK is £85,000 and the new MTD For VAT rules also apply to business that trade overseas, whether that’s buying or selling goods to international clients.
But are you ready?
As part of this new initiative, there will be several new rules that businesses of all shapes and sizes will be expected to adhere to by law. This is in a bid to create a modern, streamlined tax record system that will provide real time filing of individual transactions for the HMRC.
What are the new requirements?
From the 1st April, businesses will have to maintain all digital records and submit VAT returns using specialist software known as the Application Programming Interface or API.
All relevant VAT return data should also be linked to this system as part of this transition in order to make it easier for transactions to be traced from their original source. This will also help to streamline and improve VAT completion.
What do you need to do to prepare for MTD?
With the deadline fast approaching, you should already be thinking about investing in appropriate Making Tax Digital Software for your business, so you are ready and prepared for the 1st April.
At the same time, you should ensure that all of your accounting records are up to date and MTD compliant, as well as your VAT policies and practices.