The main aim of the Government’s new Making Tax Digital initiative is to make tax administration more effective, efficient and easier for UK businesses to maintain, store and submit that financial records.
Set to come into force on the 1st April 2019, all individuals and businesses turning over more than £85,000 a year (the VAT threshold) will need to submit their financial records to the HMRC using only recognised and approved accounting software.
The Government’s new MTD For VAT rules, aim to make it easier for businesses of all shapes and sizes to stay on top of their finances and, of course, be able to get their figures right.
The Government also believes that a streamlined tax record system will provide real-time filing of individual transactions for the HMRC, improve VAT completion and make it easier for transactions to be traced from their original source.
How should you prepare?
All digital records and VAT returns will need to maintained and submitted using only specialist software known as the Application Programming Interface or API.
Only “Making Tax Digital” Software that has been approved can be used and you will also need to ensure that all of your accounting records are up to date and MTD compliant, as well as your VAT policies and practices.
HMRC Making Tax Digital Compliant Approved Software
There is a whole host of Making Tax Digital Software options that can connect to HMRC systems and provide businesses with the tools they need to digitally report VAT information to the HMRC.
These include systems such as QuickBooks, Access Group and Sage. The system that is right for you will depend on your business needs and processes.
All of these systems have also been designed to save you both time and money when it comes to keeping on top of your finances.