Many business owners in the UK have a huge amount of questions concerning the MTD for VAT initiative that HMRC is to launch officially on April 1st 2019. Making Tax Digital is a UK government scheme that aims to improve tax compliance by making it easier for taxpayers to navigate through an online platform and keep their finances and taxes up to date.
Do you have any unanswered questions about MTD and how it could affect your business? See some of the most commonly answered queries, below:
What is MTD for VAT?
MTD for VAT is an element of a current government initiative aimed at transforming the tax system and making it more efficient and effective for taxpayers to file their returns. Its purpose is to reduce the exhaustive paperwork involved in filing tax returns by enabling businesses to maintain and update their records digitally using MTD compatible software.
What is the threshold for businesses taking part?
Any business with a VAT threshold of £85,000 and above is expected to comply with the new HMRC MTD rules and regulations.
What about businesses under the VAT threshold?
Businesses that fall under this threshold do not necessarily have to comply with the MTD for VAT rules (although they can still take part voluntarily) but all businesses are required to track their taxable turnover on a 12-month basis to ensure that they have not surpassed this threshold.
What is an MTD compatible software?
Making Tax Digital software is an online solution that is approved by the HMRC. On the HMRC website, there are a number of vendors who are listed to provide MTD approved compatible software. It is essential to get software that is both user-friendly and which integrates data, making it easier for you to navigate the platform whilst updating your information and saving valuable time resources.
Do businesses have to scan and keep printed copies of documents?
Your prime entry records are only required to be kept electronically – there is no need to make copies. The purpose of a digitalised the system is to make your business information easily accessible wherever and whenever you need them; there is no need to go through your paper copies in files anymore to find information.
When is the deadline for MTD?
MTD will officially be effective as from 1st April 2019.
What are the benefits of MTD to your business?
There are many advantages to using the MTD system. This includes a reduction of paperwork, easy tracking of records, minimising mistakes and errors, saving time and resources and more. Business growth is easy to achieve and scale as a result of being on the cloud, making MTD a valuable tool for businesses looking to increase performance.
What do I need to do to get ready for MTD?
Your business will need to be prepared to smoothly transition to the Making Tax Digital initiative by April 1st 2019. Ensure that you have all of your records up to date and start interacting with the MTD compatible software as early as possible to get a full understanding of its capabilities. If you need any clarity on aspects of the initiative then ensure that you reach out to experts who will be able to consult you on how to effectively use MTD.
Start Using Making Tax Digital Today
The clock is ticking! It’s expected that every business will comply with the HMRC regulations before April – making it imperative that your business takes steps to put the necessary processes in place in time. HMRC’s goal is to make it easier for taxpayers and help businesses across the UK grow. Start using MTD and see how it can help your business today!