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Making Tax Digital

As the name suggests, Making Tax Digital (MTD) is a new initiative by HMRC which will bring to an end paper-based annual reporting. Essentially, it requires businesses to maintain electronic records of accounts and file that information online.

This will be a major step-change for small businesses, and the specialists at Hall Morrice have full knowledge and understanding of the implications.

MTD for VAT is due to come into effect from April 2019. This will mean that business with a turnover above the current VAT threshold of £85,000 will need to keep digital VAT records and provide their VAT return through software that is compatible with MTD.

In addition to guiding clients that will need to complete digital VAT returns through the process from start to finish, Hall Morrice can maintain electronic records and submit an online return. We use cloud-based accounting software that is MTD compliant.

It is anticipated that businesses will be required to keep digital records for all other taxes and submit them online by 2020, with a two-year adjustment period. However, it is already possible to use MTD on a voluntary basis.

It is important to note, however, that final regulations surrounding MTD are not expected to be published by HMRC until April 2018. Until such a time as the regulations are known, it is not possible to state with any degree of certainty how it will impact on businesses or give specifics on what they will be required to do.

Overall, MTD has been designed to ensure that quarterly reporting is not as labour-intensive as annual reporting. Cloud-based accounting allows Hall Morrice to help you to update your books as you go along, uploading documents into the online portal so there is an electronic record of all transactions.

MTD will end the ‘last minute’ surge of activity before a tax return is due, but the offset of that is that it requires an ongoing focus to make sure that all records are kept up-to-date. Hall Morrice can cover all aspects of MTD, whether that be verifying compliance of the new reporting procedures, or processing all documentation that is required to be filed.

The landscape relating to MTD and the timescale for implementation have been moved on several occasions in the past. For the latest information about MTD, when it is to be introduced and how it will affect you, please contact us or look out for updates on our website.