Making Tax Digital, or MTD as it is more commonly known, has been around for a few years now. As of April, this year, all VAT registered businesses must be MTD compliant. This means that they must submit VAT returns via software and keep digital records of their VAT.
If you are the owner of a VAT registered business this is something you need to be aware of and prepare for.
The first thing you need to do is to speak to an accountant. For example, the team here at Cedar Accounting. We will talk through what you have records have, additional records you need to keep and how to prepare your business for MTD. Our team of professional and friendly accountants will talk you through what you need to know to prepare for making tax digital. This will include recommending the best online accounting software for you and your business too. We can then manage your accounts and the MTD process for you if you would like.
Alternatively, you can get swotting. HMRC has created a page on its website which purely talks about Making Tax Digital for Vat Registered companies. This resource gives you a lot of useful insights to help businesses like yours.
You will need to prepare your mindset for change. Change is something a lot of people are afraid of and something a lot of business owners will avoid. However, change will still happen. You will find that a digital transformation for your business will reduce workloads and improve the agility of your business. This change towards making tax digital will be a good thing for your business. Try approaching the change with an open mind.
HMRC are also introducing changes to the VAT penalty that is applied to late submissions. This will be done on a points-based system.
One point is applied per missed submission. After a certain number of points are reached by a business, there is a fixed penalty of £200.00. However, the points threshold is dependent on how frequently you have to make a submission for your business. More information on the points based system can be found on gov.uk.
For example, the points threshold is 5 points for businesses that submit their accounts on a monthly basis. Meanwhile, the points threshold is 4 points for businesses that submit their accounts quarterly. This includes income tax updates. If your business submits your accounts ton HMRC annually, then your points threshold is 2 points.
Is your business MTD compliant? Are you prepared for making tax digital? If not, give our team a call. As accountants we have the expertise your business may need to tackle complex issues that you don’t have the time, knowledge or skills to tackle on your own.
