Time marches on and the start date of 1 April 2019 for MTD approaches. This update bulletin hopefully will bring you up to date as to the implementation and give some guidance as to the next steps.
Start Date
MTD commences from 1 April 2019 and businesses whose annual turnover is above the annual turnover threshold of £85,000 are obligated to file their first VAT return for periods commencing on or after this date using MTD.
Two points:-
- Businesses that are VAT registered but whose annual turnover is below the £85,000 threshold can continue to file using the current method of filling in the nine boxes online. We would suggest that unless you use a software package for maintaining your accounts, continuing with the current method would be sensible.
(if your turnover increases to above the £85,000 you will have to transfer to MTD)
- VAT returns for the quarters ending 30th April and 31 May 2019 can still be filed using the current method and we would suggest this may be preferable so that any problems with the MTD system can be ironed out.
Registration for MTD
If you are a business that files your own VAT returns you will have to register with the Government Gateway for MTD.
We understand that this will be a simple process such that, after 1 April 2019, as you log in using your existing credentials, you will be asked if you want to register for VAT using the same login and password. (we will be checking this is the case as implementation progresses).
A word about timing here; only register for MTD when your latest VAT has been filed and your next return will be the first using MTD ( you will need to coordinate with point 2 above about the start date).
The Readiness of Bookkeeping Software
All of the common cloud-based packages ( e.g. Sage, Quickbooks, Xero, FreeAgent etc.) are or will be MTD ready by 1 April 2019; make sure you are using the latest versions if the cloud does not update automatically.
We would recommend that, if you are using this sort of software but still filing by logging in to HMRC, you file your next VAT return using the software so that your user id and password are already set up in the software.
For users of desktop packages the following versions, or later ones, will be MTD ready:-
Sage-V24.2
Quickbooks-2019
Both of the above charge a monthly subscription so costs may increase for those of you using ‘free’ older versions.
Spreadsheets
Bookkeeping records maintained using spreadsheets from which figures for VAT returns are derived will still be acceptable but returns must be filed using add-on software enabling two-way communication with HMRC.
Your spreadsheets will need to hold totals for each of the nine boxes requiring completion even if the entries are zero (e.g. for a lot of businesses, box 2, box 8 and box 9 are zero).
We have reviewed the various packages currently available and are looking for ones that appear to satisfy the following criteria we have set:
- Simplicity
- Ease of use
- Robustness
- Availability to single users and us, as agents, as well.
- Cost
We have a significant number of clients that we submit VAT returns as agents and use spreadsheets to do the calculations. It, therefore, makes sense for us to use a package that can handle our agent clients and single-user businesses as well.
As more packages are regularly appearing we have not made any decision on recommendations yet but, if you want to review how these packages operate, we list three below worth a look:-
https://www.btcsoftware.co.uk/
Final Word
As ever, please do not hesitate to contact us if you need additional help and guidance.
A Thought
Certain outcomes for Brexit could mean boxes 2, 8 and 9 disappear!!
If you would like any advice on Making Tax Digital contact us directly by calling 01623 490 120 or email