There has been a lot of debate and discussion on the topic of Making Tax Digital (MTD), but HMRC has now confirmed that MTD for business will become mandatory, beginning with MTD for VAT from 1 April 2019.
Who is affected on 1 April 2019?
All UK businesses that are VAT registered, and above the £85,000 VAT threshold, will be required to keep their records digitally and submit VAT returns to HMRC using MTD-compatible software. Other areas of MTD, such as Income tax and Corporation tax, have been put on hold until 2020 at the earliest. Businesses will no longer be able to submit via HMRC’s Government Gateway.
What do I need to do now?
As a Fresh Financials client, the great news is that there is NOTHING you need to do as you are already using Xero to submit your VAT returns. The team at Xero have been busy building their MTD functionality and have been working closely with HMRC to have it ready for the deadline. They have already successfully run several beta returns through the software. HMRC lists Xero as software that will be compatible with MTD for VAT.
Once we at Fresh Financials have access to the new VAT return we will ensure we are well-equipped to support you and your MTD compliance.
What happens next?
HMRC have announced that not all UK Businesses over the VAT threshold will be eligible to file the new MTD returns. Throughout November and December HMRC will be writing to individual businesses to advise if they need to be compliant, this is estimated to be 600,000 businesses across the UK. If you do receive this letter please let us know as they are not communicating this information with us directly.
Want to know more?
If you have any questions about Xero or Making Tax Digital, please don’t hesitate to get in touch. We’d love to hear from you.