As of 1 April 2019, the majority of VAT-registered businesses are subject to new requirements for bookkeeping and submitting returns. It is now mandatory for VAT-registered businesses above the VAT registration threshold (currently £85,000) to keep digital business records and send VAT returns using software compliant with the government’s Making Tax Digital (MTD) initiative. The aim of MTD is to make the tax system more effective, efficient and easier for taxpayers.
If your business fulfils the criteria for MTD, you will need to keep your business records digitally from the start of your accounting period, using spreadsheets, software or any other digital products. You do not need to keep any additional records under MTD; you must simply record them digitally, ready for input into your VAT return.
Your digital business records must include the following:
- your business name and address
- your VAT registration number
- a record of any VAT accounting schemes that you use
- details of the supplies your business makes and receives
Your return must be submitted using MTD-compatible software that can link directly to HMRC’s systems. If you’re unsure whether your software is suitable, you can use HMRC’s tool to search for products that are currently compatible. This list includes ‘bridging software’ which allows you to extract relevant information from non-compatible software such as spreadsheets or in-house systems, and send it digitally to HMRC in the correct format. Don’t forget that you must sign up for MTD at least 72 hours before your VAT Return is due, or 7 days before if you pay by direct debit.
At BW Accounting Solutions, we always aim to stay ahead of the game with our cloud accounting software that provides clients with an up-to-date view of their accounts at any time, from any location. Our chosen solution is already MTD-compliant, supporting digital record-keeping as well as return submissions, so we can help you prepare for your next VAT return. If you have any queries about the Making Tax Digital initiative, get in touch with us by phone at 01204 665888 or email firstname.lastname@example.org.