Making Tax Digital: Fact or Fiction

There are many rumours, stories and exaggerations going around and this is intended to set the actual position out. So, what is fact and what is fiction?

• All businesses have to change their software to cloud versions.

  Not quite! The software has to be API enabled, but Sage, for example, have upgraded their line 50 version to a cloud version which is exactly the same, but has a separate interface.

  There is also bridging software that has been developed where you can export your return to a spreadsheet and then upload it to the bridging software to file the return.

• HMRC require you to keep electronic copies of all invoices to be uploaded to their website.

  Electronic records must be kept for MTD purposes in order to remain compliant. However, only the 9 boxes currently sent to HMRC will be required when the vat return is filed and HMRC cannot access your company records.

• All businesses have to use MTD compliant software straight away.

  Only those over the threshold are currently required to do this. If you are voluntarily VAT registered, but below the £85,000 per annum threshold the gateway remains in place and can continue to be used.

  There are also some exceptions. For example, if the company is currently in insolvency and waiting to be wound up, registration is voluntary.

• All calculations have to be carried out within the accounting software.

  This is false! Manual calculations, such as for a partial exemption can be carried out manually and then entered into the software before it is filed.

• The current gateway and password will remain the same after 1st April 2019.

  They will remain the same until the first quarter commences after 1st April. If your quarters are January, April, July, and October, the first period that MTD applies commences on 1st May 2019 and the April return can be filed as now.

  However, once that return is completed, the gateway is not automatically migrated to the MTD software and you will need to reapply.