What is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative designed to transform the tax system and to end the use of the tax return for a great many taxpayers. It is intended to make it easier for businesses and individuals to maintain records and to get their tax correct. Under MTD, businesses will be required to keep records digitally and make a quarterly return of data to HMRC.
When does Making Tax Digital come into force?
Making Tax Digital for VAT (MTDV) has come into force in April 2019 and will apply to VAT registered businesses with annual sales over the VAT threshold of £85,000. If MTDV applies to you, you’ll have to use digital tools to keep records of your income and costs. Currently you may use the free Government Gateway for entering your VAT return, but this is due to close and from April 2019 you'll need to use software to submit your VAT returns electronically.
What do I need to do
If you already use a software solution to keep digital accounting records, compliance with MTDV should be relatively straightforward. Software vendors such as Pegasus are aware of the changes and will be implementing these into their solutions to ensure their software is compliant. So, making the transition to MTDV should not pose a problem.
However, for those companies using manual processes or depend on amalgamation of disparate spreadsheets from across the business, there's no choice but to automate, and to do it soon. The Government has confirmed that it's perfectly acceptable to use spreadsheets to manage information however, the VAT return must be created directly from data in the spreadsheet and submitted electronically to HMRC via bridging software.
So, if you are looking for a solution to make you compliant with Making Tax Digital take a look at Pegasus Opera 3. Give the team a call on 01233 812050 to discuss your needs and arrange a demo of our HMRC accredited software.