What is Making Tax Digital
Making Tax Digital for VAT with RIFT
Why has HRMC introduced Making Tax Digital?
HMRC’s got its sights set firmly on the estimated £9 billion it believes it’s losing every year because of taxpayer mistakes. To stop those losses, they’re looking to turn HMRC into a world leader in digital tax, and it’s all kicking off on April Fools’ Day 2019 with Making Tax Digital for VAT.
HMRC’s calling Making Tax Digital (MTD) the future of tax. It’s all about making the way you file and pay up simpler, faster and more convenient.
If it all goes according to plan, both individuals and businesses will eventually be using specialised software to report all their earnings and expenses to the taxman.
What do I need to do from 1st April?
From the 1st of April 2019, if your business is over the VAT threshold (set at £85,000 right now) it’ll be going through some changes. In simple terms, that means:
- Keeping your VAT business records digitally.
- Using compatible software to send your VAT return information to HMRC.
The actual information you’ll be sending won’t really be changing for now - nor how often you send it. It’s just a question of how it gets where it’s going. There’s a “soft landing” period lasting until April 2020. Until then, some of the rules on digital-only information transfer will be a little looser.
The actual VAT return will still have to be filed digitally, though – and the full “hands-off” system will kick in after the soft landing time runs out.
Won’t my accountant handle all this for me?
That really does depend on the accountant. A lot of financial professionals haven’t fully grasped the impact MTD for VAT’s going to have. Some don’t have any software capable of handling it, or can’t train you up to use it properly. Many aren’t used to working “in the cloud” at all.
Getting up to speed in the new scheme is going to mean understanding how to manage tricky and critical jobs like integrating your bank accounts with your new software. Every bank has its own procedures for this, and a traditional accountant probably won’t know which end is up.
RIFT Accounting, of course, has always kept up to date on this kind of thing. In fact, we’ve been using the kind of cloud accounting software MTD relies on since the very beginning. We’ve also run a pilot programme with HMRC to make sure we’ve got you covered. That puts us very far ahead of the pack when it comes to getting you set up for MTD. Whatever questions, worries or doubts you’ve got about the Making Tax Digital scheme, we’re a safe pair of hands for your business.
We're here to help so get in touch whenever you need us.