Making Tax Digital is nearly here! Making Tax Digital (MTD) will apply to virtually all VAT Registered businesses from 1 April 2019 – this is only several months away!

What is MTD?

Basically you have to use MTD compatible software to file your VAT Returns.

For example, one of my clients uses their own software which they have written over the last 10 years which brings together various monthly reports for sales, banking, gross and net profits. They then extract the information onto an excel spread sheet to produce the VAT Return and file it. This software is not MTD compatible. They will therefore need to consider using accounting software and start the process of migrating the data across which will be extremely time consuming.

We are accredited Xero software users and would highly recommend this software to be utilised as it has a number of really great additional features, such as:

• Live bank feeds – so that you can monitor your cash flow
• Monitor your profits constantly so that you can keep up to date with your business growth
• Set up tracking so that you can see how profitable each part of your business is
• Email statements with ease which can improve cash flow

So what will be the first VAT Return that will be required for a business under MTD

Let’s assume a company is VAT registered and the first VAT quarter beginning after 1 April 2019 is 1 June 2019. Therefore, the first VAT Return under MTD will be from 1 June 2019 to 31 August 2019.

If you are not VAT registered but you are required to be after 1 April 2019 then generally MTD will apply to you from the date of registration

Have you created your Business Tax Account?

With MTD it is important that you set up a Business Tax Account (BTA) with HMRC.

You can check whether you have A BTA when you log into your HMRC account and on the home page you will see “Business tax account” in their banner.

If you do not have a BTA then log on with your Government Gateway ID and then go to HMRC’s online services page and follow the on screen questions about your business.

So, if MTD applies to you, then you will need a BTA and you should register as soon as possible.