Hopefully you will have heard about HMRC’s initiative Making Tax Digital (MTD). The first stage in this initiative covers VAT reporting.
From April 2019, VAT-registered businesses with turnover above the threshold and any below the threshold that want to register voluntarily, will need to keep digital records for VAT and submit VAT returns using MTD compatible digital systems only.
Nicola Roby, Director at CHW Small Business Accountants Bolton explains further, and highlights why all VAT registered businesses should be talking to their advisers now to ensure they will be ready for MTD for VAT requirements by 1 April 2019.
I already submit my quarterly returns online – does this make me MTD compliant?
For a long time businesses have been required to file quarterly VAT returns electronically to HMRC and whilst 99% of VAT returns are currently filed online, only 15% are submitted via software.
Simply, what this means is that whilst the majority of businesses are using the government gateway service to file VAT returns, they are manually uploading information.
If your business is filing VAT returns in this way then NO, you are not MTD compliant and indeed, this service of manually uploading information will cease to be available for the majority of businesses when MTD comes into force.
A recent survey of 1,100 businesses by the British Chambers of Commerce survey found a “widespread lack of awareness among business communities about the switch to a new digitised system.”
Worryingly, the survey found that 24% of firms have no knowledge of MTD whatsoever, while a further 66% either had only basic knowledge of it, or knew it just by name.
Even of those businesses which are aware of the scheme, very few are preparing for it and according to the report, just 25% of those firms who know “a lot of details” about MTD have made plans for its implementation.
Nicola commented ‘April 2019 is fast approaching and it is worrying that such a large number of businesses are not preparing for the new regulations.
‘Keeping records digitally can have a wide range of other benefits for businesses and we work closely with business owners to find the software solution which works best for them.’
If you are not already talking to your accountant it is now time to do so. To discuss this or any other aspect relating to your small business finances contact the team at CHW Small Business Accountants Bolton now on 01204 534031 or via our contact us page.
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