In our last post we provided an introduction to Making Tax Digital (MTD) and to help you understand it all further we've covering our frequently asked questions to help clear a few things up!
What does it actually mean for me?
If you are a VAT registered business it means you will have to submit your VAT returns using accounting software. You will no longer be able to do it on the HMRC website.
If you are VAT registered but do not have turnover above the VAT threshold of £85,000 you can opt out of MTD but we are still waiting for HMRC to tell us how!
When does this come into effect?
You must start following the new rules from the first day of your first VAT period following 1st April 2019. If you have a 1st January to 31st March VAT quarter this will mean 1st April is your first day following the new rules.
If you have a 1st February to 30th April VAT quarter your first day will be 1st May.
Can I use a spreadsheet instead of accounting software?
It’s best not to. HMRC wants VAT records to be “kept and preserved” and they believe because of how easily spreadsheets can be changed that they aren’t secure enough.
We recommend working with Xero or Quickbooks as our preferred accounting software and can help with discounts to make the cost more affordable for you.
MTD talks about digital records, does this mean I need to photograph all my receipts?
No thankfully not! It simply means that you need an electronic record of the transaction, and a line in your accounting software meets this.
We know that HMRC wont be rolling out MTD to any other taxes until at least April 2020 to ensure that the process works smoothly with VAT first. As soon as we know more we will keep you updated!