The death of paper-based VAT records is nigh. Are you ready for Making Tax Digital (MTD)?
Businesses have just a few weeks left to prepare for Making Tax Digital. Sussex-based chartered accountants, Carpenter Box, is reminding business clients that the deadline is rapidly approaching.
The migration to digital is happening because from April 1, 2019 paper records will cease to meet the legal requirements in tax legislation where VAT is concerned.
Almost all VAT registered businesses with a turnover above the VAT threshold (currently £85,000) will need to maintain digital records, for VAT purposes from the changeover date.
They will also need to provide their VAT information to HMRC by using third party commercial software.
VAT registered businesses with a turnover below £85,000 will not have to use the new system until April 2020, at which time the Government expects to widen the scope of MTD to both Income Tax and Corporation Tax.
A small number of businesses such as trusts, local authorities, public corporations, unincorporated ‘not for profit’ organisations, VAT divisions and VAT groups who have more complex requirements have until 1 October 2019 as HMRC believe they may need more time to test the system.
Public sector entities required to provide additional information on their VAT return (e.g. Government departments and NHS Trusts, and traders based overseas) also have until 1 October 2019 to comply with the new MTD requirements.
Stuart Noakes, Partner and Head of Tax at Carpenter Box, said: “Once bedded in, MTD should make it easier for businesses to get their tax right and keep on top of their tax affairs. However, we know that some businesses will be daunted in the move away from the paper systems they have managed with for many years. We can certainly help them to find a cloud solution, submit quarterly returns to HMRC and we even provide training to ensure that they remain compliant.