From 1 April 2019, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are required to keep digital records for VAT and send HMRC returns using Making Tax Digital (MTD)-compatible software. Click here for help and support.
Businesses can also take advantage of the opportunity to go digital for Income Tax. Visit GOV.UK to find out more.
It’s important that businesses are aware of obligations if joining MTD for Income Tax or VAT. You must keep digital business records and:
- for VAT, submit returns to HMRC using MTD-compatible software
- for Income Tax, provide summary updates of income and expenses to HMRC quarterly (or more often if you choose) through MTD-compatible software
The deadlines for sending VAT returns and making payments are not changing, including for monthly, quarterly and annual VAT return schemes, but businesses will have to keep digital records and send returns to HMRC using MTD-compatible software for VAT accounting periods that start on or after 1 April 2019. This also applies to businesses that operate the Flat Rate Scheme for VAT.
If you have an agent, speak to them about getting ready for MTD.
If you already use software, you should speak to your software provider to find out when it will be MTD-compatible and what you have to do.
You do not need to keep any additional business records because of MTD. However, business records must be kept digitally to be compliant. If you use spreadsheets, the spreadsheets must be able to submit the required data to HMRC digitally, for example, by using MTD-compatible bridging software.
Bridging software allows relevant data to be digitally exchanged from the spreadsheet or other source where the digital records are kept, directly to HMRC. The summary information must not be physically re-typed into another software package.
For larger businesses using bespoke in-house software solutions, make sure your IT team is aware of the new MTD technical standards as they may want to link in-house solutions directly to HMRC’s APIs.
For more information contact SDSTeam@hmrc.gsi.gov.uk.
If you want to find out more about being involved in the private MTD VAT pilot can email HMRC for more details.
If you are a business or landlord that wants to join the MTD Income Tax pilot you’ll need to keep digital records and send updates to HMRC using compatible software. More information about existing products and how to join the pilot is available on GOV.UK.