October 31 2018 was the deadline for submitting paper self-assessment tax returns. The next deadline (for online submissions) is January 1 2019, then on April 1 2019 the Making Tax Digital scheme (MTD) will make online VAT tax returns mandatory for all businesses above the VAT threshold (£85,000). In less than six months, your taxes will be digital whether you are ready for it or not. As experts in this field, the tax accountants at Tax Agility have compiled together all the information you need to know.
What’s actually required?
On April 1 2019, all businesses above the VAT threshold will no longer be able to keep manual records of their VAT legally. From this point onwards, digital records must be created and stored in appropriate software such as spreadsheets. The data must be able to connect to HMRC via an Application Programming Interface (API). In this case, the API is a specialist accounting software that is compatible with HMRC’s systems and allows for the data to be transferred directly, rather than the figures being manually entered into the HMRC portal.
The software used must also meet other specific requirements, including but not limited to:
- It must be able to keep the required records in digital form and preserve them for up to six years
- It must be able to create a VAT return from digital records (it cannot rely on manual records whatsoever)
- It must be able to provide HMRC with additional data on a voluntary basis
- It must be able to receive information from HMRC about the business’ compliance record.
In most cases, the software you choose should already be approved by the government, in which case it will be capable of this already. However, if you choose independent software, then you will need to know its capabilities before you agree on using it.
A helping hand
Don’t panic if this all sounds overwhelming to you, because there are some tools you can use to help yourself out.
As a business owner, you may have already received an invitation to try the pilot scheme for MTD on a voluntary basis. Although the objective is to help test the systems, getting involved now can prepare you for the changes sooner than later.
On the government website, there is a list of compatible API software that you can use to submit VAT returns. Any of the programs from this list will have all the necessary functions, and you can theoretically choose any one of them. However, some have more support than others: users of Xero, for example, can benefit from the specialist cloud accounting support we offer.
Tax Agility can help with MTD
At Tax Agility, we’ve worked with Xero for such a long time that we’re now gold partners, a position that gives us several benefits we can share with our clients.
For more information on how Xero can help your business into the next era, give us a call on 020 8108 0090 or use our online form.
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