Businesses are being urged to get ready as over 2,000 businesses a day sign up for Making Tax Digital for VAT.
Almost 1.2 million businesses have one month to go before the introduction of Making Tax Digital (MTD) – a new way of keeping business records and submitting digital VAT returns. HMRC is urging businesses to sign up now.
Nearly 30,000 businesses have already signed up to the new service which will give them a more integrated approach to business and tax. This will reduce the time they spend on administration in the longer term and make it easier for them to get their tax right.
For VAT periods from 1 April most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software. HMRC has written to every business that will be mandated with information on what they should do and how.
Mel Stride, financial secretary to the Treasury, said: “It has never been more important for businesses to be able to seize the opportunities that digital technology offers. Making Tax Digital helps them to do just that – making it easier for businesses to get their tax right first time by transforming how they keep their records and send information to HMRC. It will give businesses more control over their finances, allowing them to spend time focusing on innovation, growth and the creation of jobs.”
Theresa Middleton, director of the Making Tax Digital for Business Programme, said: “There are over 160 software products for businesses to choose from with a range of prices, including some that are free, offering different levels of functionality to suit every business. It’s time to get on board and join the thousands of businesses already experiencing the benefits of MTD.”
Accountants or other tax representative will already be aware of MTD and will advise businesses how and when they need to make changes to be ready for the new service. Those already using software will simply need to ensure it is MTD-compatible then sign up to the new service and authorise their software for MTD. For those who are not using an accountant though or don’t currently use software, it is quick and easy to sign-up and there is lots of information available to help them prepare, including about what software is available.
Businesses are advised to:
• Take steps to find out if your business is affected by the Making Tax Digital changes and what you need to do if it is. Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.
• Talk to your accountant or other agent – if you use one to manage your VAT affairs - about how they are making returns Making Tax Digital compliant.
• Speak to your software provider if you already use software to ensure it will be compatible.
• Those businesses who are either not represented by an accountant and/or do not already use software will need to select software to use and sign-up to MTD, then authorise their new software for MTD. HMRC’s webpages provide information on a wide variety of products, from free software for businesses with more straightforward tax affairs, to increasingly sophisticated paid solutions. There are also products that can be used in conjunction with a spreadsheet for those businesses who don’t want to change their underlying record keeping system.
Easy to use guides for businesses, agents and others including easy-to-follow advice are available here.