In little under a year all businesses that file VAT returns will have no choice but to file those returns online and through dedicated accountancy software. The move is part of the Government’s Making Tax Digital programme, and businesses are far from ready.
From April 2019, the 2.55 million VAT registered businesses with a turnover exceeding the £85,000 VAT threshold will be required to file VAT returns through Making Tax Digital compliant software and not via the current HMRC portal.
The move will require businesses or their advisers to use Making Tax Digital compliant software, such as QuickBooks, Xero or Sage.
Bryan Elkins, Partner and Head of Tax, said: “Informal surveys and discussions with colleagues in accountancy firms across the country estimate that just one quarter of firms’ clients currently use Making Tax Digital compliant software – and that is worrying.
“It is further complicated by the fact that government has only recently published its detail guidelines, holding back software companies from rolling out the required software and upgrades. Everyone is cutting it fine.”
We offer the following advice to businesses:
- If your turnover exceeds the VAT threshold of £85,000 you will no longer be able to file your VAT returns via the HMRC portal. They will need to be filed via Making Tax Digital compliant software.
- Current providers include QuickBooks, Xero, Sage and Twinfield.
- The information VAT returns need to include is not changing.
- Look for announcements and information from your accounting software vendor.
- Talk to your accountant and make sure they fully understand the Making Tax Digital regime.
- And do not leave until April 2019.
Bryan adds: “Accountancy firms are generally up to speed with the Making Tax Digital regime, so do seek advice from your accountant. We do expect many more businesses to choose to use their accountant to file VAT returns, at least in the short term, as everyone gets used to the new regime. And whilst that will add costs to business it is relatively modest when compared to the fines HMRC can issue.”