What is Making Tax Digital?
Making Tax Digital is HMRC’s move to digitilse tax, and our goal is to help you get it right.
On the 13th of July 2017, HM Treasury and HM Revenue & Customs published its second Finance Bill of 2017. Which includes changes to the proposed Making Tax Digital initiative, click here for more information.
Introducing a new digital tax system is believed to be the right direction to move in. However, it has made amendments to the businesses this impacts and the timescales for change. The amendments to Making Tax Digital now mean:
- Only VAT registered businesses above the threshold (£85,000) will need to submit their VAT return through commercial software.
- They will only need to do so from 1st April 2019.
What does that mean for your business?
If you are VAT registered, then you will need to move to digital record keeping (i.e. use software to record all your VAT invoices and receipts).
If you are not VAT registered, then digital record keeping is optional.
If you are VAT registered and do not yet use software to record your VAT information (invoices to customers and from suppliers) you need to start planning for Making Tax Digital.
Digitising tax is a good thing. You’ll no longer have to provide the same details twice. You’ll get a real-time view of your tax so you’re not taken by surprise when bills come in. Having all of your tax details in the one place makes everything simpler.
Why is it happening?
HMRC loses £9bn each year on taxation errors, and they believe that’s partly due to the way businesses declare their income – digital record keeping and automated VAT submissions will make the process easier and error-free.
As a solution to improve VAT, you will need to record your transactions throughout your VAT period directly from your software. It’s a simpler, more efficient process that will be less disruptive to your business in the long run.
Is my version of Sage compliant?
If you are using Sage 200, only the latest release of Sage 200Cloud (April 2018) is MTD compliant and can enable the submission of VAT returns to HMRC.
If you are using Sage 50, only the latest release of Sage 50Cloud (v24.2) is MTD compliant and any future releases beyond this.
Lastly, if you are using a previous version of Sage 200 or Sage 50; Sage have created an MTD submissions module to enable you to remain compliant. This module will be available at an additional cost on a rolling 12-month contract.
Support from CIM Services
CIM Services are committed to helping our customers adapt their software to ensure they remain compliant with the new Making Tax Digital initiative.
To discuss and find out more about Making Tax Digital, your next steps or any other queries, please feel free to contact us.