What is MTD?
Making Tax Digital for Business is the government’s latest reworking of the tax system, and will begin to take effect from April 2019 for businesses that fall under the VAT threshold (currently £85,000).
According to the latest information from HMRC, other types of tax won’t be effected until April 2020 at the earliest, and only once the system has been proven to work by the current raft of beta users and the VAT registered businesses. If you have chosen to register your company for VAT, but fall under the threshold, you can choose whether you want to comply with MTD from next April or not.
The first businesses to fall under Making Tax Digital will be those with a VAT quarter running from April 1st to June 30th 2019, however this means they will need to be using compliant accounting software for their VAT by their 2018 Year End, so as to avoid a mid-accounting period change that could leave them with information spread across two separate systems when they come to do their accounts or tax return.
The government is currently consulting on draft regulations and a VAT Notice, which will hopefully provide a better idea of how MTD for VAT will work. The consultation closes on February 9th, with the intention of making regulations no later than April 2018.
What are we doing about MTD?
From February, we will be inviting all VAT registered clients (non-clients also welcome) to small monthly events with the intention of explaining how MTD will impact on your business and our relationship as client and advisor, as well as demonstrating some of the available, compatible software. The first to be invited will be those clients with a Year End of April 30th, allowing us to transition your VAT function as well as your tax information onto the MTD compliant software of your choice in plenty of time for your 2018/19 period.
We are taking a proactive approach to the upcoming changes to the tax system and will ensure all of our effected clients are prepared and compliant well before the April 2019 kick-off. Get in touch if you’d like to discuss MTD and how it will impact on your business in more detail.