The new tax year is now in full swing. Whilst some may be focused on what the new tax year brings, there’s one thing is for certain – Making Tax Digital is here!
Yes, we’ve been banging the MTD drum for quite some time now, and the reality is it’s come round the corner pretty fast, and we’ve been hard at work to make sure our clients are fully prepared for its arrival.
With first wave of digital tax here to stay, there’s a lot that may have changed, or will be changing for your business. What needs to happen? What do I need to file? What’s now required of me? So many questions!
Don’t worry, we’ve got the answers, and we’ve compiled everything you need to know about Making Tax Digital going forward, and what’s next for your business and the relationship with your accountant.
I’m using Xero, and filing my own VAT returns
For VAT registered businesses (with a turnover above £85,000), you’ll need to file VAT retains and maintain digital records under the new MTD regulations. Part of MTD included getting step up on software such as Xero, our software of choice.
The next important step is to be able to file your VAT returns under the new HMRC system, which will be for your VAT periods commencing on or after 1st April.
Part of this requires signing up with HMRC, and we advise that you don’t do this until any returns needing to be filed under the old method have been. Once signed up, you won’t be able to submit returns under the old method.
You can sign up with HMRC now if you have everything in place and no more returns need filing under the old method. Details can be found here.
Within the Xero platform, you’ll be asked if you wish to enable the MTD VAT return solution – This message will appear when you open the VAT return section of Xero).
I’m using Xero, and my accountant files my VAT returns
If you’re working with an accountant who handles your VAT returns on your behalf, chances are you’re in safe hands.
Their responsibility will be have Xero fully configured for you, and following that, they’ll sign you up for HMRC.
This process will require some input from you. You may receive an email from HMRC asking you to verify the email address. The last your accountant will want is to delay things, so be sure you do this promptly.
And once that’s done, you’re ready to roll! You’ll be setup and ready to go and we can continue to support you and your business going forward.
I’m not using Xero, what do I need to do?
With the new requirements of MTD, Xero is a worthwhile platform to be investing in. You’ll undoubtedly want to address how your records are maintained too, as you’ll be unable to file VAT returns going forward unless you’re using compatible software.
Our suggestion would be to explore Xero sooner rather than later. It’s our chosen solution to delay with MTD requirements, and there’s a whole host of features that can support your business in all aspects going forward.
Don’t delay – be ready for change
Whatever your circumstances, it’s clear that Making Tax Digital is going to make inevitable change to businesses of all types and sizes.
If you’re unsure, why not head over to our MTD Hub, which explains what you need to do depending on your business’ size or tools already set up. You can also contact our team by visiting the website or calling us on 01223 832477 to discuss things further.