What is Making Tax Digital?
Making Tax Digital is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers.
Making Tax Digital for VAT makes it mandatory for VAT-registered businesses above the £85k threshold to keep records and submit VAT returns digitally using HMRC-recognised software like Xero.
The Government confirmed in their Spring Statement that Making Tax Digital will not be extended for any new taxes or businesses in 2020.
What software will I need?
HMRC stipulates that businesses within the scope of MTD must use ‘functional compatible software’ to meet the new requirements.
This means a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The software functionality must include:
- Keeping records in a digital form
- Preserving digital records in a digital form
- Creating a VAT return from the digital records held in functional compatible software and providing HMRC with this information digitally
- Providing HMRC with VAT data on a voluntary basis
- Receiving information from HMRC via the API platform that the business has complied.
Parker Cavendish are a certified are a certified Xero Partner and work with a number of other cloud based software packages such as FreeAgent, Sage and Quickbooks.
Contact us today to find out how we can save your business time and money, while making the transition to Making Tax Digital for VAT as stress-free as possible.