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MAKING TAX DIGITAL: WHAT’S NEXT?
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Posted by CMA Accountancy Filed in Business #Tax #payroll #bookkeeping #Finances #vat #CIS Reporting #Pensions 13 views
It’s been nearly three years since HMRC went live with the pilot for Making Tax Digital (MTD) for VAT. Since April 2019, UK businesses that had turnovers above the £85,000 VAT registration threshold were mandated to process and submit their returns digitally.
As the next stage of the MTD roll-out, from April 2022 business owners who are below the £85,000 threshold will now need to comply with MTD for VAT. But what does this mean?
Small business owners still submitting VAT via the HMRC portal or post will soon have to maintain records digitally and file VAT returns through approved software. Otherwise, they could be hit with unwanted fines – an unwelcome addition to the endlessly rising cost of living crisis nationwide.
Businesses need to have signed up to MTD for their first VAT period starting on or after 1st April 2022. Additionally, they must sign up to MTD at least five days after their last non-MTD VAT return deadline date, and no less than seven days before the first MTD VAT return deadline date or the company may have to pay VAT twice.
HMRC will ask for a number of digital records to be kept – ranging from the business name, adjustments to returns, rate of VAT charged on supplies made, and more. While businesses can use spreadsheets to calculate or summarise VAT transactions and work out what information they need to send to HMRC, they’ll need to use compatible software to actually send it.
Rather than using a spreadsheet, and then purchasing a secondary software to make the submission, we recommend using the impending regulation changes to streamline your record keeping by transferring to a cloud-based software, such as Xero or QuickBooks. Although every business has its specific needs, digital software can offer time saving features that any business would struggle to turn down:
- Pulls transaction data straight from your bank or invoicing software.
- Updates transactions daily, allowing you to stop searching out your monthly bank statement.
- Create digital versions of receipts by photographing them and storing them online.
- Automatically calculate the tax that you owe.
- View your business performance on-demand based on real-time data.
It would be easy to look at MTD as something that businesses have to comply with, even if they don’t want to. If you do find yourself of that opinion, consider the benefits this could have on your customer experience also. People now expect businesses to be operating in a digital space to help them keep everything in one place, so don’t waste any more time and sign up to Xero, QuickBooks or another cloud-based solution today!
Our expert team of accountants are ready to help with all aspects of your transition to Making Tax Digital, VAT and cloud software needs!
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