Making Tax Digital: Making Sense of Government’s New VAT Rules
This month it has been confirmed that all VAT-registered businesses with a taxable turnover above £85,000 will be legally required to keep digital records and send their returns via compatible software.
So what does this mean for companies and when will the new legislation come into force?
Does your business need Making Tax Digital?
If your business is turning over more than the current threshold, you will need to move to the MTD system in time for the accounting period on or after 1/04/2019.
Even if your income dips below £85,000 after this date, you’ll still need to file returns digitally unless you deregister your business from VAT.
If you earn below the threshold, you can still opt in to Making Tax Digital and many of our clients who expect to eventually exceed £85,000 turnover are preparing early and doing just this.
There are a number of businesses and organisations that are being granted an additional six months to prepare. Those included below have until 1st October 2019 to begin using MTD.
- Not-for-profit organisations that are not set up as a company
- VAT divisions and groups
- Public sector entities that are required to provide additional information on their returns (eg government departments and NHS trusts)
- Local authorities
- Public corporations
- Traders based overseas
- Organisations that must make payments on account
- Annual accounting scheme users
Prepare your business for MTD
To get Making Tax Digital ready, you need to keep digital records from the start of your accounting period. Records must lay out tax point, net tax excluding VAT and the rate of VAT charged. Using the right MTD software will make this process easy and ensure you have all the correct information included in each return.
For more information on MTD-compatible software, click here.
For detailed guidance, click here. Contact the ABL Group expert team today for additional compliance tips and insurance solutions.