Choosing Making Tax Digital for VAT Software
There is less than a month left for VAT-paying businesses to prepare for Making Tax Digital (MTD).
MTD is the government’s flagship tax digitalisation scheme that will require all businesses to keep digital records and file and pay tax online.
MTD for VAT is the first stage of the digital rollout and takes effect from 1 April 2019.
If your business has a taxable turnover above the VAT registration threshold of £85,000, you must keep digital VAT records and send VAT returns to HMRC using MTD-enabled software.
Survey evidence shows that more than 40% of firms that need to comply with MTD for VAT are ready for the changes.
If your firm is still treading water, then you need to get help and get help fast, ensuring that you have MTD functional software in place before the April deadline.
Make sure it is approved by HMRC
Getting MTD-compatible software or ‘functional compatible software’ is the most important thing that you can do to get ready for MTD for VAT.
HMRC has compiled of list of more than that can be used to submit VAT returns. This includes market-leading software solutions FreeAgent and Xero, which can be used by freelancers and small-and-medium-sized businesses.
HMRC says that MTD-compatible software can be used to:
- Connect with HMRC systems
- Report VAT information to HMRC
- Receive important information from HMRC
There are also a number of software solutions that are in development but not yet ready for HMRC. You can find a list of software that’s in development .
With less than a month to go until the MTD for VAT deadline, it is probably wise to choose software that is available now.
Make sure it is suitable for your business
It may sound like MTD will be an extra administrative burden for your business, but using software to make and keep digital records holds a number of advantages for business, providing the software is suitable.
You can use spreadsheets with approved bridging software to report to HMRC, but if better financial administration is important to your business, then you can get more substantial software solutions like FreeAgent or Xero for a similar price.
Embrace the cloud
Cloud-based software means that you can access information about your business finances from anywhere with an internet connection.
It means that you can check details at the office, at home or on the go. It also makes it easier to collaborate with different employees and your accountant, where they can securely log in to view business accounts.
FreeAgent and Xero are both cloud-based software packages.
Ask your accountant
No-one understands your business finances better than your accountant. Your accountant should be able to advise you on what MTD-compliant software is best for your firm’s specific needs.
Having an accountant that’s comfortable with digital record keeping and reporting will become more important as MTD is rolled out across other taxes.
Cloud Accountant are digital software accounting specialists. For help and advice with MTD, speak to one of our account managers today. Call: 0808 281 0303.