HMRC have confirmed there are no changes to the 1 April 2019 date after which businesses are obliged to file VAT Returns digitally if their turnover is above the VAT Registration threshold, and have now issued a formal VAT Notice to this effect. All VAT Registered businesses need to take action now to ensure they will be compliant.
Why does tax need to go digital?
Who will need to use the software?
- Businesses, regardless of turnover, can benefit from using software to keep digital records. Software not only helps the effective running of a business but also reduces avoidable errors in business records that can occur when manual calculations are performed, or information transposed by hand.
- By keeping up to date digital records in real time, businesses are less likely to lose receipts and digital records can also reduce the risk of errors due to lost or incorrectly recorded invoices. Over time, nudges or prompts will be introduced into software which will help to eliminate common errors.
- Going digital makes managing business finances more straightforward. Millions are already banking, paying bills and interacting online – going digital with business records and taxes is the next step, giving businesses more control and better capability to forward plan with their finances.
- By making it easier to get things right, digital record keeping will reduce the risk of unwelcome and costly HMRC compliance interventions and help businesses to manage their cash flow more effectively.
- Keeping business records digitally means that it’s easier for you to share records with your adviser, saving both time and costs, and allowing your adviser to focus on helping you manage your business.
VAT-registered businesses and landlords with an income above £85,000 will be required to report to HMRC on a quarterly basis by using MTD compatible software. HMRC have announced that the use of spreadsheets will be allowed, but they must be submitted via compatible MTD software.
Which software should be used?
A list of software suppliers has been released by HMRC and includes Xero, Sage Business Cloud, QuickBooks and Sage One. The current online VAT portal will no longer be available from HMRC once MTD goes live.
Many businesses have successfully moved over to digital processes. At Scrutton Bland our sblive service is compatible with HMRC’s requirements, and provides a wealth of compliant and effective features such as:
What do businesses need to do now?
- Access to your accounts 24/7, giving you real time data
- Record and preserve records in electronic format in line with MTD rules
- Provide HMRC with information and VAT returns in electronic form, in accordance with MTD regulations
- Receive information from HMRC in electronic format.
You need to make sure that you and your business are prepared by arranging for your HMRC digital account to be activated as soon as it becomes available.
Many of our clients are already using the software that will seamlessly integrate into the MTD reporting requirements, via our SBLive service. Scrutton Bland are currently liaising and working closely with our tax software providers and will be testing the software to assist with the development. We will be providing information, training and support to our tax clients to ensure that the process is as simple and straightforward as possible.