Damon Anderson, Xero UK
With just days to go to until Making Tax Digital for VAT becomes law, Damon Anderson, director of partner & product UK & EMEA at Xero, shares his advice for anyone making the digital transition.
UK business making over £85K in taxable turnover will have to file their tax digitally through HMRC cloud accounting software, or face fines.
Up to 1.1 million UK SMEs will be initially affected by MTD for VAT, but for those who get it right, you’ll be filing your taxes with greater accuracy and ease than ever. Ready to go digital? Here’s how:
Know if you are eligible for MTD for VAT
If your taxable turnover is over £85K per annum you could be eligible for MTD for VAT. Making Tax Digital rules apply from your first VAT period starting on or after 1 April 2019. A ‘VAT period’ is the inclusive dates covered by your VAT Return. If your taxable turnover goes below the VAT registration threshold after 1 April 2019, a business is still required to keep digital records and send HMRC their VAT returns using MTD-compatible software. This obligation doesn’t apply if the business deregisters from VAT.
Chose an MTD for VAT HMRC delivery partner
If you're not ready for MTD, there is still time. The simplest way to file your tax digitally is to partner with an HMRC-recognised MTD for VAT implementation partner like Xero. All VAT registered businesses must keep records and accounts. Under Making Tax Digital some of these records must be kept digitally within functional compatible software. Records that are not specified in HMRC’s notice, or that are not required to complete your VAT Return, do not need to be kept in functional compatible software.
How do I start?
Convert your existing software and accounting tools into MTD for VAT compatible formats. Xero can help you to convert your spreadsheets and desktop software using tools like MoveMyBooks. And if you are running out of time we can help you connect your spreadsheets to Xero as part of our bridging solution. The bridging solution will allow you to use spreadsheets to calculate VAT and keep digital records. It is available in all Xero plans that support VAT. Check out Xero’s Making Tax Digital resource hub for updates, free guides and toolkits.
Not sure at all about VAT? Call HMRC’s VAT advice line. And for anyone unsure about the process of getting their clients online, visit Xero’s MTD hub. Also check out Dexter, a cartoon tax advisor offering advice and information around the new legislation.
Finally.. enjoy it!
MTD for VAT will help you work smarter and faster and make your tax filing much more accurate and efficient. Part of the UK’s ambitions for a digital Britain, MTD for VAT will help businesses and finance professionals perform better in the cloud. Jump in.
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