Making Tax Digital: What I Learned in One Day

I spent all day today studying MTD, which means Making Tax Digital.

I also watched a seminar from Sage, and got documents from QuickBooks to get all their data.

Here is my summary.

What HMRC wants

HMRC wants to make ALL tax digital (electronic) eventually.

They are starting with VAT-registered businesses with a turnover greater than the current threshold of £85,000 per annum.

From the VAT quarter that starts on or after 1 April 2019, those businesses have to record all their accounts digitally. They also have to submit their VAT returns using MTD-ready software.

In other words, they can no longer do their accounts manually and then type the VAT return into the HMRC website.

What about spreadsheets?

There is mention that you might still be able to use spreadsheets. But then you would need software that takes the figures from the spreadsheet and sends the VAT return to HMRC.

I would think it is easier to simply do the accounts in bookkeeping software instead of a spreadsheet.

Who is next

From 1 April 2020, all VAT-registered businesses with a turnover below the current threshold of £85,000 come under the same rules. They too will record their accounts digitally and submit their VAT return using MTD-ready software.

HMRC is moving towards ALL tax matters being recorded and submitted digitally. That will include Self-Assessments.

There is also mention of self-employed people (I am guessing that means those who are not VAT-registered) needing to record and submit quarterly accounts through digital software. This is not on the timeline yet, so no details are known.

What I do not know yet

I have not found any mention on the timeline of CIS returns, so I am not sure what happens with those. CIS means Construction Industry Scheme.

At the moment I submit CIS returns manually on the HMRC website. I guess they will be subject to the same changes.

What you can do

Lots of changes then, especially if you do not currently record your accounts digitally.

It may soon be time to invest in some software (and training) yourself, or in a good bookkeeper to do this for you.

I will endeavour to keep you up to date as changes are published.

As always, keep it simple and... Flourish and Prosper

Lisa