Making Tax Digital starts to come into effect from 1st April 2019, but with the House of Lords Select Committee joining other calls to delay its introduction, claiming HMRC has failed to adequately support small businesses, should you be worried if you are one of the businesses that fall within its scope?
The first thing to consider is will you be required to sign up from April? If you are a VAT registered business you can sign up for the pilot now, otherwise all 1.2m VAT registered businesses over the VAT threshold of £85,000 will be obliged to sign up from April 2019 (with some exceptions for religious beliefs, age, disability, remoteness etc.). It will initially only apply to VAT for return periods commencing on or after the 1st April; the rest comes later.
Other businesses will have to wait until at least April 2020 once the rollout plan and criteria for Income Tax MTD has been finalised.
So, if you fall within its scope, how do you prepare? If you use one of the popular bookkeeping/accounting systems it’s almost certainly going to do the job for you – your provider has probably already been in touch, otherwise check with them. If your turnover is above the £85,000 threshold you are a fairly substantial business and if you don’t have an accounting system, it might be worth looking at the opportunity that one offers, with its improved efficiency from automation, management information reporting tools, and or course MTD compliance.
How about if you use a spreadsheet? Well technically they are classed as a form of digital record keeping, though you might need to adapt it to give the information required. Manual records will no longer be an option for MTD businesses and will need to be “digitised”, maybe using spreadsheets as a first step. If you are familiar with the VAT return, at the end of the day only the data for the existing 9 boxes will need to be submitted using bridging software already available, cut and paste is acceptable during the first 12 months, but thereafter it will need to be done digitally.
Unless of course the House of Lords has its way.
Here at Business Northumberland we are planning to run free workshops in the New Year to help you be MTD compliant and to help you turn MTD into an opportunity – dates will be announced shortly.