In 2019, HMRC made tax digital meaning people can track their business and professional transactions automatically. This system will help to make tax filing more accurate, efficient and transparent. With big changes happening to the way tax is being processed, businesses may benefit from working with a Making Tax Digital (MTD) expert such as our Sheffield based Millhouses Accountancy team.
Here is an overview to help you understand the changes and how to prepare for them. If you are in need of a Sheffield MDT expert we can help you keep one step ahead and ensure your business works in alignment with the latest changes.
WHO WILL BE IMPACTED BY THE MTD CHANGES?
VAT-registered businesses that have a taxable turnover that is above the current VAT registration threshold of £85,000 will be required to keep digital VAT business records and use MTD-compatible software when sending returns.
These changes may seem daunting, especially with the use of new technology but don’t worry! The new system is designed to help streamline your tax filing and help you be in control of the finances of your business. Of course, new systems take getting used to so if you’re unsure or would like some assistance, our Sheffield MTD expert team can help you avoid any mistakes.
WHEN DO THESE CHANGES COME INTO EFFECT?
For the majority of businesses, this digital taxing system will come into effect for the VAT period starting on or after 1st April 2019. As with the previous taxing system, businesses with a taxable turnover lower that the VAT threshold can choose to sign up for the Making Tax Digital system voluntarily.
For some businesses that have more complicated requirements such as not for profit organisations, trusts, VAT groups and local authorities the mandate for MTD has been pushed back for 6 months in order to ensure the service works properly for these business types. This means these particular businesses will have until 1 October 2019 before MTD is mandate and requires them to keep digital records and use MTD-compatible software for VAT returns. Not sure if this applies to your business? Our Sheffield Making Tax Digital (MTD) expert team can give you advice and assistance on the requirements of your business.
WHAT DO I NEED TO DO IN PREPARATION FOR MTD?
It is up to you whether you implement the changes yourself or get an accountant to assist with the transition. You will need to keep a digital record of your business records from the start of your accounting period. It is important the software you are using is MTD compatible too. If it is not or you are not currently using software, it is important to find a software that suits your needs and is MTD compatible. If in doubt, our Sheffield MDT expert can help get your business set up with suitable software.
If you don’t participate there are penalties in place just as there are for the current VAT rules. There will be new rules in place as of April 2020 (which is when income tax and corporation tax systems will be made digital too).
CAN AN ACCOUNTANT HELP WITH PREPARATIONS?
An accountant can help you to prepare for the MTD changes, this may involve setting up new accounting software and processes depending on your current situation. Having an accountant on hand can help your business to implement changes and ensure a smooth transition. If you’d like more information or assistance, our Sheffield Making Tax Digital (MTD) expert team at Millhouses Accountancy can help your business to prepare for these MTD changes.
For more information about our accountancy services, bookkeeping services or XERO services, call us on Sheffield 0114 345 0960 or Nottingham 0115 882 0356