MTD – is your business ready for the April VAT deadline?
In a little under three months all businesses, with a taxable turnover exceeding £85,000, that file VAT returns will have no choice but to file those returns online and through dedicated accountancy software.
From April this year, 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.
We have been talking to our clients about the HMRC’s Making Tax Digital programme and the April deadline, and it is clear that the Government’s promotion and communication to support this move is not working as well as we would have hoped. Businesses are just not prepared for this move.
Research conducted by ourselves with 530 businesses in the second half of 2018 suggests that just 65% of businesses understand and are prepared for the changes, with just over half (53%) of the businesses surveyed using Making Tax Digital compliant software. A worrying 27% of businesses do not think their finance teams are ready for the Making Tax Digital deadline, and 19% having not heard of Making Tax Digital at all, leaving themselves at risk.
The good news is that most accountancy firms are up to speed with the Making Tax Digital programme and are already using fully compliant software. If you are unsure whether your accountant is fully Making Tax Digital compliant, then ask.
If your business manages VAT returns directly, look for information and resources from your software provider. They too are up to speed with the Making Tax Digital programme and are already increasing their communications and support around this.
The online filing of VAT returns is the first step in a much large digitisation programme of way the government collects personal and corporate tax which will take many years to roll out.
- 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 of Making Tax Digital compliant software include QuickBooks, Xero, Sage and Twinfield.
- The information VAT returns need to include is not changing.
- Talk to your accountant and make sure they fully understand the Making Tax Digital regime.
- And do not leave until April.
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