Making Tax Digital

We are ready! Are you?

Following the first phase of Making Tax Digital (MTD) for over 1 million businesses, the rules and penalties are being tightened from 1 April 2020.

Businesses not following the digital rules will be liable for penalties from HMRC. His means that further upgrades are likely.

The biggest change will be felt by hundreds of thousands of small businesses that keep their records in summary Excel or on paper. The 2020 changes oblige these businesses to digitalise recording of supplies received and made, including time of supply, value and VAT rate. So aside from sales, this extends to purchases, stocks and fixed asset transactions. This will likely lead to the small businesses buying some basic accounting package for the first time – which should be MTD compliant for filing, too.

The second change will impact most large to enterprise-sized businesses. From April 2020, transfer of data between functional compatible software (invoice and accounting systems etc.) must be done using digital links. This means no manual inputting, including manipulation, consolidation or error corrections in spreadsheets. That includes the ending of the ‘cut and paste’ concession allowed for the soft-landing.

However, if they can ensure an interrupted digital journey from their accounting or invoices systems to the bridging software and then onto HMRC, they can continue on this route. Detailed off-software calculations, such as partial exemption, will remain exempted from digital journey obligations.

The third change is that the suspension of penalties on late MTD filings ends, too. These are on a cumulative basis, based on the number of offences in the past 12 months. This can reach 15% of the VAT due, plus fines of up to 100% of undeclared VAT as a result of careless or deliberate inaccuracies.

In short, the hard work and software investment will be for next April. Bookkeepers Direct can help you to address the issues you need to be thinking about to be compliant from 1 April 2020.

Still not sure?

Please feel free to give us a call or send us an email, we are more than
happy to come out and explain in more detail the services we can offer you.

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