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Making Tax Digital: Fact or Fiction

A guest post by Margaret Sheppard ...

Click here to view a mobile version of this blog post  


Making Tax Digital is being introduced slowly by HMRC to change the way companies communicate with them ....

When it comes to Making Tax Digital, you need to know what's fact and what's fiction!

When it comes to Making Tax Digital, you need to know what's fact and what's fiction!

copyright: nexusplexus / 123rf

Instead of using the gateway and password as they do now, all businesses will eventually have to use API (Application Programme Interface) enabled software when filing to HMRC sites. The first step of this commences with VAT for those businesses above the registration threshold and commences with the first period starting on or after 1st April 2019.

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.

Take care on the timing of this, as once you are registered for MTD you cannot continue to use your current gateway and password. Not all software is currently ready to enable the return to be filed using MTD log in details.

"Would you like to know more?"

If you'd like to find out more about Making Tax Digital then do give me a call on 01908 533 351 or click here to ping over an email and Alison will forward it on to me.

Until next time


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