Making Tax Digital Checklist: What do you need to know?
Posted on: 16 October 2018
By: Amy Bruce, Marketing Executive
What is Making Tax Digital (MTD)?
Making Tax Digital is a HMRC initiative to help make it easier for businesses to get their tax right. Ultimately, MTD will affect every business and you need to understand how your business can prepare for each stage of the MTD roll out.
Who does it affect?
Stage 1 of the initiative begins on 1 April 2019. VAT registered businesses, with turnover above the VAT threshold (currently £85,000) will have to submit their tax records digitally and provide their VAT return information to HMRC through MTD compatible software. Submitting VAT returns through HMRC's Government Gateway will no longer be possible.
Stage 2 will roll out in April 2020 where the remaining VAT registered companies (those voluntarily VAT registered and those with VAT-able turnover under £85,000) will need to submit their VAT returns using a compatible software.
Eventually, after a successful roll out of MTD for VAT, all trading companies, sole-traders, landlords and partnerships will need to use MTD software to keep a digital record of financial transactions.
What to do next?
You need to decide whether your business will be impacted by stage 1 of MTD. If it's clear that your business will be affected, then you need to consider how much impact there will be. It's also important to consider getting a better understanding of the changes if your business is approaching the VAT threshold or if you're new and growing. Taking a proactive approach in understanding the changes and potential impacts will ensure you're not surprised or left in the dark when the time comes.
If you know you'll be a part of the stage 1 MTD initiative, then you need to start reviewing the way you submit your tax returns.
Do you already use accounting software?
If you already use accounting software, then the change for you may not be so disruptive. It may be a simple process of using the software's updates features to continue your processes similar to how you do it now, by simply submitting the results through the software. Your software provider will support you in this process.
Do you need to upgrade or find new software that is compatible?
You may currently be using old or out-dated accounting software that will never be compatible for MTD. Your provider will be able to update you on their processes but it’s important to look at other software options that will work with your business processes and allow you to submit tax returns using the new MTD approach.
Do you use spreadsheets or other manual processes?
If you currently submit tax returns in a manual, paper process or with spreadsheets then you need to consider ways to replace your existing process with a digital approach that will allow you to submit tax records through software compatible with MTD.
How are prof.ITplus customers affected?
prof.ITplus is Making Tax Digital ready. We're currently running beta testing with eligible customers before the full update is announced.
You may shortly receive notifications from HMRC of plans for companies to sign up to the public beta but, once signed up, all your future VAT returns will be submitted this way. It is important that you do not sign up to the public beta until you have been advised that prof.ITplus is ready.
We will continue to provide our customers with updates on our progress of launching the MTD functionality in prof.ITplus.
Any further questions you have regarding your prof.ITplus software, don't hesitate to get in contact with your Account Manager, or alternatively contact [email protected]
Will you be developing all your software products (Finisher & prof.IT)?
OGL is only developing our prof.ITplus software to assist MTD. We’re committed to investing our time developing our larger, most recent and most widely used prof.ITplus software to ensure the current version has all the best up-to-date features. Any customer operating older, tailored versions of our software, will be without this functionality. You will need to contact us to inform us whether your accountant will be submitting the records on your behalf or whether you require development to your specific software.
Fully integrated suite of finance functions Structured, intuitive accounting processes Extensive functionality to handle all financial processes Eliminate the need for additional accounts software Full visibility of financial position prof.ITplus is Making Tax Digital Read y . For more information on MTD, view our checklist and ...Find out more >
With the Making Tax Digital deadline getting closer, it’s important to be fully aware of what the changes mean to you. Before April 2019 you need to know if your current software is MTD ready and if not, work on implementing a solution that is VAT compatible. If you realise your software isn’t compatible, don’t worry, we have a complete software so...Find out more >