Making Tax Digital

A major date in the MTD calendar is fast approaching: August 7th is the first compulsory deadline for submitting quarterly VAT Returns since the roll-out of HMRC's Making Tax Digital initiative.

Although Making Tax Digital came into effect on April 1st, until now, you might not have noticed any changes in the way you report your taxes, and you might not have made any steps towards preparing your business for online VAT Returns. But with the first major MTD deadline fast approaching, all of this is about to change.

In this blog post, we look at what August 7th means for businesses using HMRC’s Making Tax Digital scheme and what you should do to make sure you don’t miss this deadline.

While there is a considerable amount of information available regarding HMRC’s new Making Tax Digital (MTD) initiative, it can quickly become confusing for businesses that are required to now submit their VAT returns online with approved software.

For example, many businesses were not aware that it is necessary to sign up for MTD. Qualifying businesses are not automatically able to submit VAT returns online.

Businesses already working with HMRC-approved software also had the belief that this meant they were already signed up for MTD, or that by connecting through their current software, this would sign them up. This is not the case.

It’s almost here. In less than a week, the April 1st Making Tax Digital deadline arrives. What does this mean for businesses? For some, it will mean that they will need to use HMRC-approved software to digitally keep track of their records and submit returns directly to HMRC online.

If you already know that your business falls under the requirements for using Making Tax Digital software and you’re a Debitoor user, then you’re already ahead of the game. But just in case you’re just getting started, here is a quick list of three things you can do now to get ready:

The start of Making Tax Digital for businesses over the taxable turnover threshold of £85,000 is just around the corner. With April 1st coming up quickly, VAT-registered businesses in the UK are looking for answers and solutions for managing VAT returns under the requirements laid out by this new regulation.

Here at Debitoor, we’ve also been hard at work preparing for the April 1st deadline, to ensure that the software offers the options necessary for our users to continue their invoicing and accounting needs and meet the requirements of Making Tax Digital software.

In this article we have a short set of questions and answers about MTD in general, plus specific information about Making Tax Digital and Debitoor.

Before you start panicking - if you're used to keeping paper records or doing things manually, this doesn't suddenly mean that you have to start scanning everything you've ever done so that there's a digital copy of it all. You can carry on with a paper based system so long as each individual transaction is also recorded and stored somewhere digitally (to later be communicated to HMRC).

With HRMC’s Making Tax Digital deadline(s) approaching fast, we thought it would be a good idea to look at what HMRC means when they consider a business “complex” (in turn, complex enough to give some businesses a 6 month delayed deadline until October 2019).

By this point, you've probably heard somewhat of HMRC's new Making Tax Digital Scheme that's set to roll out on the 1st of April 2019. Or you might be very familiar with it.

HMRC want to use their Making Tax Digital initiative to bring tax reporting and compliance up to date - and for HMRC themselves to become one of the most digital advanced tax administrations in the world.

As it stands, all businesses that are over the VAT threshold of £85,000 a year turnover and are not complex in nature will have to comply with HMRC's Making Tax Digital scheme when it's introduced in April.

If your business is considered complicated, then Making Tax Digital will not come into effect for you until October 2019.

After some debate (and feedback on how it should be structured in regards to simplicity), HMRC have settled on how penalties will work for filing or paying late when it comes to submitting your VAT return online under the new Making Tax Digital scheme. The scheme comes into effect on the 1st of April 2019.

In 2019, HMRC is introducing the newest regulations involving the digitisation of tax in Making Tax Digital for business. The new requirements will apply to any business with an annual turnover above the VAT threshold, as well as those that have voluntarily registered for VAT.