From 1 April 2019, all VAT-registered businesses with a turnover above the current VAT threshold of £85,000 will be required to record and send their VAT information to HMRC digitally using Making Tax Digital-compatible software. This applies to sole traders, partnerships, companies, LLPs and charities.
The key change under MTD relates to how businesses record, calculate and submit VAT return information.
Under the new regulations, businesses must record all transactions digitally, keep those records in “functional compatible software” (i.e. software and spreadsheets that can connect to HMRC via an approved interface) and preserve digital records in compatible software for up to six years.
Businesses using spreadsheets to maintain records may still be able to do so under MTD, but HMRC has advised that these systems will need to link to and be submitted digitally through MTD-compliant software.
If your business currently uses a software package for all VAT records, then you need to check that the software is MTD-compliant and that you are using an up-to-date version that is MTD-compatible.
If the software you use is not compliant, then you will need to look at what options are available to you to comply under MTD.
Cloud Accounting Software solutions
Cloud accounting software is similar to traditional desk-based software except it is hosted on remote servers and can be accessed from any device with an internet connection. It has the advantage of always being up to date, it can be accessed by multiple users and is flexible.
We can offer a variety of cloud accounting software solutions, all of which are MTD compliant, including KashFlow, QuickBooks and Sage and we are happy to discuss your requirements with you to ensure you choose the package that is best for your needs.