Upcoming Event

What is MTD (Making Tax Digital)

MTD is a key part of the government’s plans to make it easier for businesses to get their tax right and keep on top of their tax affairs. HMRC’s ambition is to be one of the most digitally-advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.

Businesses need to keep digital records and use compatible software to send their VAT returns or Income Tax updates to HMRC, and receive information.

Keeping digital records and providing updates to HMRC directly through MTD-compatible software will help reduce errors, cost, uncertainty and worry. This streamlined digital experience will integrate tax into day-to-day business record-keeping, so that businesses can view their tax position in-year and be confident that they have got their taxes right.

 

What do businesses need to do to be ready to sign up for MTD?

You must start keeping your business records digitally before you can sign up for MTD. If you already use software to keep your business records, check with your software provider what their plans are. If you don’t use software just now, or your software won’t be MTD-compatible then you’ll need to consider what software, or bridging software, is most suitable for you.

Event Details

Location Stratfield Brake, Kidlington, OX5 1UP
Date 23rd October
Cost Free

 

Event Agenda

9:00 – 10:00 Intuit Software (Showcase MTD compliant software cloud solutions)
10:00-10:15  Coffee
10:15-11:00 Brookwood MTD Roundup
11:00 – 11:15 Coffee
11:15 – 12:00 Receipt Bank (Showcase MTD Compliant software cloud solutions)
12:00 – 1:00  Q & A

 

Register for Event

Frequently Asked Questions

What is Making Tax Digital?

MTD is a key part of the government’s plans to make it easier for businesses to get their tax right and keep on top of their tax affairs. HMRC’s ambition is to be one of the most digitally-advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.

Businesses need to keep digital records and use compatible software to send their VATreturns or Income Tax updates to HMRC, and receive information.

Keeping digital records and providing updates to HMRC directly through MTD-compatible software will help reduce errors, cost, uncertainty and worry. This streamlined digital experience will integrate tax into day-to-day business record-keeping, so that businesses can view their tax position in-year and be confident that they have got their taxes right.

What do businesses need to do to be ready to sign up for MTD?

You must start keeping your business records digitally before you can sign up for MTD. If you already use software to keep your business records, check with your software provider what their plans are. If you don’t use software just now, or your software won’t be MTD-compatible then you’ll need to consider what software, or bridging software, is most suitable for you.

You can find out what MTD software is available for the Income Tax pilot by visiting the software choices page on GOV.UK. We’ll publish details of what VAT software will be available later in the year, when we make the VAT pilot public.

There’s more information about how businesses can get ready for MTD on GOV.UK.

HMRC is encouraging businesses to sign up to the Income Tax and VAT pilots. If you have an agent, you should speak to them first about when it would be best to sign up for MTD.

What do agents need to do to get ready for MTD?

If you have not already done so, you will need to create a new Agent Services Account. Once you have done that you can copy over your existing agent-client relationships.

If you are already using commercial accounting software, you should speak to your software provider to find out when it will be MTD-compatible, either for Income Tax or VAT and what you need to do to enable the new features once you have signed up your clients.

Check that your clients are preparing for MTD and when they plan to start keeping digital records, if they are not already doing so.

There’s more information about how agents can get ready for MTD on GOV.UK and in Agent Update 66.

What records do I need to keep digitally for MTD?

For VAT

MTD does not require you to keep additional records for VAT, but to record them digitally.

Your digital records should include, for each supply, the time of supply (tax point), the value of the supply (net excluding VAT) and the rate of VAT charged.

They should also include information about the business, including business name and principle business address as well as your Vat Registration Number and details of any VAT accounting schemes you use.

Customers who currently record daily totals can continue to do so, but they have to be captured digitally.

If you use spreadsheets to keep business records you’ll need MTD-compatible software so that you can send HMRC your quarterly VAT returns and receive information back from HMRC. Bridging software may be required to make spreadsheets MTD-compatible.

You can find more detailed information about VAT in the VAT Notice.

For Income Tax

You’ll have to use software to capture details of all your business income and expenditure for the entirety of your accounting period.

Your business records will include details from invoices and receipts for purchases and as a minimum should include the date, the amount and the category.

Many businesses already use record keeping software and it’s important to check when this software will be MTD-compatible, or find out whether it integrates with other software that can make quarterly submissions (bridging software). If you are unsure about how to enter information into your software, you should speak to your software provider.

If you use spreadsheets to keep business records you’ll need MTD-compatible software so that you can send HMRC your quarterly updates.

I’m an agent, do my clients need to use the same software that I do?

Your clients do not necessarily need to use the same software that you do. For example, some agent software can interact with a wide range of different types of business software. A number of software providers already provide for their products to link with other software.

The important thing is that the movement of information between client, agent and HMRC must be digital, with submissions to HMRC made through the new MTD service.

If you are in any doubt, speak to your software provider.

What do you mean by MTD-compatible software?

Compatible software is a software product or set of software products, that between them support the MTD obligations of keeping digital records and exchanging data digitally with HMRC through the MTD service. If more than one application is being used then data that flows between those applications must also be exchanged digitally.

Digital records can be kept in a range of compatible digital formats. They do not all have to be held in the same place or on one piece of software. For example, a spreadsheet can be a component of digital record keeping provided the product that consolidates records, or summary records from the spreadsheet is digital.

Businesses should discuss with their agent or software provider if in doubt.

What is bridging software?

Bridging software is how HMRC describes the digital tool that can take information from other applications, for example, a spreadsheet or an in-house record keeping system and then lets the user send the required information digitally to HMRC in the correct format.

Can I still use spreadsheets for my business records?

Spreadsheets may be used to record and store business transactions digitally. However, those spreadsheets must be able to submit the required data to HMRCdigitally, for example, using bridging software or an API enabled spreadsheet that can integrate directly with HMRC systems.

The bridging software must be capable of extracting or receiving the information from the spreadsheet digitally and then sending it to HMRC systems.

The summary information must not be physically re-typed into another software package.

Can I still use spreadsheets for my tax calculations?

A spreadsheet can be used to calculate or summarise detailed VAT transactions to arrive at the summary information you are obliged to send HMRC.

However, those spreadsheets must be able to submit the required data to HMRC digitally, for example, using bridging software.

The bridging software must be capable of extracting or receiving the information from the spreadsheet digitally and then sending it to HMRC systems.

The summary information must not be physically re-typed into another software package.

How do I find out what software is available for MTD?

You can find out which MTD-compatible software products are available for Income Tax on GOV.UK.

New products will be listed on this page as soon as they become available.

Details of software products for VAT will be made available once the pilot opens more widely.

Will free software be available for businesses?

HMRC is working very closely with the software industry to ensure the availability of a wide range of products for businesses at a variety of different price points. There are no plans for HMRC to offer its own software products. We expect the market to be very competitive with software available at low cost to businesses.

We also expect that many existing software packages may be updated to provide compatibility at limited cost to customers. In many cases, software will be updated as part of a regular update cycle to include security updates and new functionality like MTD.

The government is committed to ensuring the availability of free Income Tax software for the smallest unincorporated businesses with the most straightforward tax affairs once they are mandated to join MTD.

Who can sign up for the MTD VAT private pilot?

For the MTD for VAT pilot we are working initially with a small number of volunteer businesses and agents in a controlled way so that we can continue to test our systems and their products.

The volunteers meet a specific set of eligibility criteria to join. Some are represented by agents and others are unrepresented. As we continue testing, we’ll increase the numbers and start to invite businesses with more complex features.

Getting involved in the private VAT pilot helps business prepare for these changes sooner rather than later and your feedback also helps to shape the service as it continues to develop. It’s important that businesses have the appropriate software package, so they should speak to their software provider or agent first if they have one.

Anyone interested in taking part in the VAT private pilot can register their interest with HMRC by writing to us, and we’ll let you know when you can join the pilot .

Even if a business can’t immediately join the pilot, they should start thinking about keeping digital records now if they aren’t already.

When will MTD for VAT be mandatory for my business?

All VAT registered businesses with a taxable turnover above the VAT threshold will have to join MTD for VAT from 1 April 2019. This is mandatory for VAT return periods that start on or after 1 April 2019.

How many VAT returns will I have to send under MTD for VAT?

For VAT, MTD doesn’t change how often businesses have to send information to HMRC, but rather how they do it.

Under MTD, records of business transactions must be kept digitally, and businesses (or their agents) will submit their VAT return through MTD-compatible software. VATRegistered Businesses do not need to provide more information, or more regularly, than they do now and payment deadlines are unchanged.

What if my taxable VAT turnover is below the threshold?

Businesses already have to check their turnover for the last 12 months at the end of each month to see if it exceeds the VAT threshold. If it does then MTD applies from the first day of the following month.

If VAT taxable turnover subsequently falls below the VAT registration threshold businesses must continue to follow the MTD rules.

A business with a turnover below the VAT threshold can voluntarily join MTD for VAT.

How will submissions of VAT returns change?

Businesses within the scope of MTD for VAT will be required to send their VAT returns to HMRC using MTD-compatible software. They will no longer be able to submit VATreturns using the HMRC portal. Businesses who already record their transactions digitally, and then file using HMRCs online service using MTD-compatible software will speed up the submissions process and reduce the likelihood of errors, especially transposition errors.

Who can sign up for the MTD Income Tax pilot?

Businesses that are already registered for Income Tax with HMRC can sign up for the MTD pilot. They can do that if they’re a sole trader with income from one business and/or a landlord (except if they have income from furnished holiday lettings).

We will release more functionality throughout the year to allow customers to report other sources of income through software e.g. bank interest and dividends.

A new business that wants to join the MTD Income Tax pilot must first register for Income Tax with HMRC.

What will I need to do if I join the MTD Income Tax pilot?

You will need to keep records of your business transactions digitally and send a summary update to HMRC using your software quarterly (or your agent can do this on your behalf). At the end of the year you may also have to send a final report to confirm your income and expenses at the end of your accounting year. If you need to claim allowances and reliefs, you can do this within that final report.

Many businesses are already submitting information digitally- what’s in it for them?

The MTD programme is much broader than just keeping records digitally and updating HMRC electronically from those records.

It will bring with it a whole new way of interacting with government and MTD provides the necessary technological first step to achieve this.

If you are already recording your business transactions digitally using MTD-compatible software you will now be able to send information to HMRC at the click of a button, rather than logging on to HMRC’s portal and typing in data to submit returns as a separate activity.

Software will help you to stay on top of your record keeping, allowing you or your agent, and those who represent them, to better understand how your business is is performing.

You can view an estimate of the tax you might owe at the end of your accounting year, based on the information you have provided so far in your business tax account as well as through your software.

You can also choose to send an update to HMRC more often, for example, if you want to see a more up-to-date estimate of the tax you might owe and you can pay your bill as you go, if it makes it easier for you to manage your budget.

You can also ask your agent to send updates for you.

Where do I get help to sign up for MTD from?

Go to GOV.UK for details.

What if a business doesn’t have internet access or can’t use it?

If a business has a taxable VAT turnover above the VAT threshold then from April 2019 they are required to keep digital records and send returns to HMRC using compatible software. Businesses with turnover below the VAT threshold don’t have to do this, but HMRC is encouraging them to do so voluntarily.

However, HMRC recognises that not everyone will be able to do this. Where for example a business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers) they may be exempted.

Additionally if it is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reasons of age, disability, remoteness of location or for any other reason, you may be exempted. You should contact the VAThelpline if you think this applies to you. HMRC also provides digital assistance if an exemption is not appropriate.

Businesses subject to insolvency procedures do not have to use MTD.

What if I am already exempt from online filing for VAT?

Exemptions from MTD for VAT are the same as those that are already in place for online filing for VAT. Some examples are given above. If you are already exempt from filing your VAT return online, you will continue to be treated as exempt for MTD for VAT.

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