There is less than three months to go until Making Tax Digital transforms the UK tax system. If the new rules apply to you, it is essential that you prepare your business now to avoid a penalty from HMRC.
Over the last six months, we’ve been working hard to help clients across our offices, assisting with the switch to MTD-compliant platforms, as well as supporting businesses who need to upgrade their existing software.
If you’re still not sure what you need to do, get in touch with your local office. As a Champion client, you have direct access to MTD experts who can help you make sure you are 100% compliant. The countdown to April is on, so don’t leave it too late.
What is Making Tax Digital?
From 1st April, VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 will be mandated to use the Making Tax Digital service to keep records digitally, as well as use software to submit their VAT returns.
If you’re below the threshold, you can still choose to register for the scheme voluntarily.
Is my accounting software compliant?
In order to remain compliant, you will need to keep your VAT records using MTD-compatible software. Check whether your current software is compatible here.
Those using older versions of Sage, for example, may find that they are no longer compliant once MTD is introduced. If this is the case, you might want to switch to a more cost-effective software package now, as upgrading to a more recent version of Sage later down the line could be extremely costly. Speak to your client manager to find the right software for you.
Risks of non-compliance
Although HMRC has discussed a soft landing with respect to some aspects of MTD, there will be penalties for non-compliance. The VAT default surcharge will continue to operate at first. However, the government has proposed a new points-based approach to non-compliance, with the individual receiving a point each time they submit a late return. Either way, non-compliance is likely to be an expensive mistake.
With the deadline fast approaching, we’re on hand to help anyone struggling with digital reporting. Get in touch with your adviser today, or email us at firstname.lastname@example.org, to make sure you’re fully prepared in time for 1st April.