The future of finance is digital. Making Tax Digital (MTD) is one of HMRC’s key strategic priorities, with the aim of transforming and modernising how tax is reported and managed.
From April 2019, all businesses in the UK with a turnover above the VAT threshold (currently £85,000) will be required to keep digital records of their VAT in addition to filing electronic quarterly returns.
Is your business prepared?
MTD specialist representatives from KPMG; Vicky Fletcher, Indirect Tax Manager and Nicola Hickin, VAT Senior Manager outlined some key features AIA members need to consider:
- A large percentage of businesses continue to use Excel for VAT returns. This can continue following the introduction of MTD, but a change of processes will be required in order to remain compliant, including the use of appropriate ‘bridging software’ to link to HMRC.
- MTD will require an upgrade in technical systems so that tax information is transmitted digitally. Manual transposition of data will no longer be compliant.
- Whilst MTD becomes compulsory from April 2019, there will be exceptions to this rule. Businesses with ‘complex’ VAT requirements will not be mandated to use the new MTD service until October 2019
- Approach MTD in a simple step by step approach:
1. Diagnostic Assessment – Are you ready for the MTD April 2019 introduction? If not what needs to be done in order to be compliant.
2. Process Improvement – Can you optimise current processes in order to become compliant? What system changes will be required?
3. Future Proofing – Look to future proof systems in readiness for a potential increase in requirements under MTD for digital and automated tax return processes.
Sharon Gorman, AIA Director of Development, commented: “Instead of thinking about MTD as another ‘hoop’ to jump through, I would urge our members to approach the MTD process as a positive opportunity to review and improve processes in order to ensure compliance.
“As an association we are here to help and guide our members, so please utilise the downloadable documentation available from HMRC and KPMG, and if in doubt contact the AIA directly.”
HMRC has a number of approved ‘bridging software’ suppliers for you to utilise. For a complete list please click here.
If you require any further information on the Making Tax Digital process try downloading the MTD KPMG Guide here.
Or alternatively contact one of the AIA team who would be happy to assist.