Despite a report issued by The House of Lords economic affairs committee in November 2018 which calls for MTD for VAT to be delayed until 2020 due to HMRC’s unrealistic timeframe, lack of communication with businesses, and failure to improve from previous criticism, it looks like HMRC are still going ahead with the April 2019 Go-live date.
So we examine what is exactly required below:
All businesses with a taxable turnover above the VAT registration threshold (currently £85,000 per year) will be required to comply with the MTD rules. Businesses with turnover below the threshold can choose to opt to use the MTD rules if they wish.
A business within the scope of MTD must use ‘compatible software’ to meet the new requirements which are available mostly on subscription basis (QuickBooks, Xero, Sage, Zoho, etc).
The new requirements for the business is to essentially:
– Maintain digital business records
– File relevant VAT information electronically using MTD compatible software
Businesses that are in scope of MTD will need to comply with the new rules for VAT return periods starting on or after 1 April 2019. For example, if your business submits VAT returns for 31 March 2019, you will need to comply with the MTD rules for the period ending 30 June 2019 onwards.
To prepare and get ready for this change, at first businesses will need to be using an online accounting package which will be compatible for MTD for VAT purposes. Where multiple software programs are used to record and process VAT information, such as spreadsheets, there must be a ‘digital link’ between each piece of software.
If you are already using an online accounting package to maintain your VAT records then there is a very good chance that you are MTD ready for when the requirements come into force. We suggest that, you should speak to your accountant or software provider to confirm compliance ahead of the April 2019 deadline and also ensure that you have registered for an MTD for VAT account with HMRC.
HOW CITYEDGE & CO. CAN HELP?
Here at CityEdge & Co. we have the expertise and knowledge about cloud based accounting software and VAT services to help businesses and individuals become MTD compliant for VAT. We have helped a number of our client transition from manual or excel based record keeping to an online cloud based accounting systems as well as delivering training sessions on software’s such as QuickBooks to ensure they are compliant with MTD rules from April 2019 as well as obtaining Value Add real time information which can help with improving business performance.
If you require help and guidance to be MTD ready for VAT before the April 2019 deadline or for more information about cloud accounting, please contact us by phone on 020 8550 5295 or by email at: [email protected].