What does it mean to me?
As with any new ‘red tape’, there is a lot of apathy, anxiety, head in sand attitude, acceptance etc. Hopefully this explanation gives you a better idea of what is involved and more importantly what you need to do.
HMRC’s research has led them to think that over 9 billion pounds is being lost in tax revenue annually, hence the creation of MTD (Making Tax Digital), this will be a quarterly return.
There have been many business surveys over the years which have found that if any business processes their accounts quarterly then they have a 71% chance of surviving. Businesses with excellent bookkeeping have a 63% chance of survival. This is against annual accounting 36% survival and poor non-existent bookkeeping 2.5% survival rate.
If you are running a business with sales / turnover more than £10,000 annually then MTD will affect you. The majority of businesses will need to make a MTD return starting from 1st April 2020. If you are a VAT registered business with a sales / turnover more than £85,000 annually then you need to start from 1st April 2019.
What data is required? The MTD return comprises of each invoice date, value excluding any Vat and the VAT rate if you are VAT registered. It requires your business name, address and VAT number if registered.
This information can only be sent to HMRC via a recognised provider – mainly the accounting software packages. You will also need HMRC gateway access – most businesses already have a gateway for VAT, PAYE etc. For sole traders then my understanding is that it will be accessed via the HMRC personal gateway for self-certification returns. They are calling this your own Digital Tax Account (DTA).
Things to do
- Make sure you have HMRC gateway setup for your business
- Make sure your current accounting software is compliant with MTD, if not upgrade
- If you process your accounts without software – you will need to get software
- We can assist with all of this, even what seems like a ‘silly question’ is better asked, than carry on regardless.