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.

 

Please see note below regarding the soft landing period.

For a free initial meeting to discuss how we can help you contact us online or call us on T: 023 9248 4356T: 023 9248 4356


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Digital Accounting for Businesses  

The introduction of HMRC’s Making Tax Digital (MTD) for VAT from 1 April 2019 (or 1 October 2019 for businesses with more complex requirements to comply) 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.

For businesses registered for MTD, VAT submissions must 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.
 
It is important therefore that all businesses affected should ensure they have adequate software and processes in place to comply with the new regulations. Copy and pasting or manually copying data across from one system to another will not be allowed.
 
Soft-landing period

For the first year of MTD, HMRC allowed a soft-landing period which meant businesses didn't have to comply with the 'digital links' criteria. This requires businesses to ensure that, if they use multiple systems to record and/or file their VAT returns, these systems must be able to send/receive information to/from each other without manual intervention.

The soft-landing period was due to end for VAT periods starting on or after 1st April 2020 (or 1st October 2020 for deferred businesses). However due to the COVID-19 crisis, HMRC has extended the soft-landing period so that it will only cease to apply to VAT periods starting on or after 1st April 2021.  

How we can help

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 mjs@morriscrocker.co.uk or tel 023 9248 4356.

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

Read our cloud accounting case study

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I am a GP partner working in London. I have used Morris Crocker to produce my partnership and personal accounts for a number of years.The team at Morris Crocker are superb. Friendly, efficient and very knowledgeable. They have a very experienced team who have a huge amount of knowledge for NHS GP practices. As well as preparing my accounts and tax returns they provide additional services such as financial management. They have helped me on a number of business matters such as capital gains, budgets and forecasts. Pete and his team make things straightforward and easy to understand. They also helped us streamline the day to day bookkeeping by use of IT and have always been on hand for support and advice any time. I would not hesitate to recommend them as accountants especially to GPs. In the current NHS you need the best accountant that you can find who know what they are talking about. You will find that in the team at MC.  

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