Making Tax Digital

HMRC's Making Tax Digital for VAT is now live for most VAT-registered businesses with a turnover above the current VAT-threshold of £85,000.


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Digital Accounting for Businesses  

The introduction of HMRC’s Making Tax Digital (MTD) for VAT from 1 April 2019 brought a fundamental change to the way businesses submit their VAT returns. VAT registered businesses with a turnover exceeding the VAT threshold (currently £85,000) are now required to record transactions digitally and file their quarterly returns using compliant software.

There is a six month deferral period (until 1 October 2019) for businesses with more complex requirements to comply.  These include trusts, not-for-profit organisations that are not set up a company, VAT groups, traders based overseas and those required to make payments on account and annual accounting scheme users.  Businesses will only qualify for the deferral if they have it in writing from HMRC.

For businesses registered for MTD, VAT submissions should be made using HMRC-compliant software.  Not all software will be compatible with HMRC’s new system and all transactions should be ideally stored within the same software that is making the submissions.

Businesses should note that they will not be able to submit their VAT return if they do not have compatible software when they sign up for MTD.

Also, businesses that pay VAT by Direct Debit cannot sign up in the 15 working days leading up to, or the 5 working days after, sending a VAT Return.


View HMRC's introductory video for Making Tax Digital for Business below.

If you are currently using a manual or desktop bookkeeping system we would urge you to think about changing to an online accounting system.  Not only will this ensure you have the right software in place when more frequent reporting to HMRC takes effect but offers many other benefits for your business.

From our experience of working with businesses who use online accounting software, two products we would strongly recommend are Xero and QuickBooks Online.  We can provide versions specifically tailored to meet the needs of your business and offer help with the initial set up and training.  Both packages provide you with the required tools to manage your finances more efficiently.  Used correctly, they give you an overall, detailed and up-to-date view of your business for better decision-making as well as compliance with the new reporting regulations.

Online accounting software is available by monthly subscription.  Both Xero and QuickBooks Online offer subscribers constantly updated systems which guarantee that you are always using the latest version. 

If you currently use a desktop version of Sage or Quickbooks, Xero offers free conversion of two years' worth of accounting data. It is possible to use the same service to convert to QuickBooks Online, but this is not funded by QuickBooks and hence there is a charge. However for users of the desktop version of Quickbooks wishing to convert to the online version, all existing accounting data can be transferred free of charge. Please note that prices for the conversion process are subject to change as this is a third party service.

For more information or to arrange a free demonstration, please contact Martin Southern by email at or tel 023 9248 4356.

Please see our advice guide on Registering for Making Tax Digital for VAT. (April 2019)

You can also find more information at our cloud accounting page.

Read our cloud accounting case study

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