Getting the
BEST RETURN
Don’ t be caught out by the change to a new digital tax system
Making Tax Digital is the UK government’ s vision for a digital tax system to‘ make it easier for individuals and businesses to get their tax right and keep on top of their affairs’( HMRC July 2017).
As with any major project, this is happening in phases and the first deadline to look out for is Making VAT Digital in April 2019.
If your business is VAT registered and has a taxable turnover of more than £ 85,000 then from April 2019 it must comply with the new Making VAT Digital rules. Noncompliance could lead to fines of up to 15 % of your annual VAT charge!
If your business continues to submit returns using the old system and pays on time, you may still be subject to the default late payment surcharge as HMRC are expecting the information in the new format.
Let us help you to unravel what this means …
1. VAT RETURNS MUST BE FILED ELECTRONICALLY FROM APRIL 2019 This means no more filing VAT returns through the government gateway. The information must come straight from accounting software to HMRC.
2. RECORDS MUST BE HELD DIGITALLY Software must be used to calculate the VAT due, report the VAT figures to HMRC and receive information back from HMRC. This must include time of supply, value and rate of VAT charged, and amount of input VAT allowed in the case of purchases. This information must be recorded by the date of the VAT return.
If your business is VAT registered and has a taxable turnover of more than £ 85,000 then from April 2019 it must comply with the new Making VAT Digital rules
If easier, businesses could keep records in a spreadsheet and pass the spreadsheet onto an accountant with compatible software who can upload or input by the VAT deadline. Watch out though, by April 2020 digital links must be in place between spreadsheet and software, and manually retyping data from one system to another will not be allowed. The actual data provided to HMRC will be no different to the totals currently submitted with no additional backing required, although there will be the option to submit certain supplementary data.
WHAT MAKES YOU EXEMPT FROM MTD REPORTING FROM APRIL 2019?
• Turnover is less than the VAT registration threshold.
• Owners are practising members of a religious society whose beliefs prevent the use of computers.
NOTE:
There will be no change to VAT reporting dates and no requirement to change VAT quarters to align with accounting period or tax year.
Self-assessment
• Disabilities of individuals or location of business make it very challenging to use digital tools.
• The business is going through insolvency.
If any of these apply to you, call the VAT helpline on 0300 200 3700 to notify them and discuss options for submitting.
Otherwise, the business must continue to file VAT under the Making Tax Digital regime until it is completely deregistered from VAT due to falling below the threshold.
SELF-ASSESSMENT DEADLINES
Register for self-assessment if self-employed or sole trader, not self-employed( eg due to investments or property), partner or partnership.
Deadline 5 October 2018
Paper tax returns Midnight 31 October 2018 Online tax returns Midnight 31 January 2019
Pay the tax you owe Midnight 31 January 2019 First payment on account * Midnight 31 January 2019 Second payment on account * Midnight 31 July 2019 * Check with your accountant if you are not sure if this applies to you
Accounting & Bookkeeping Consultancy Ltd
Accountant FMAAT, AATQB T: 07429 386274 • Email: angela @ accountingbookkeeping. co. uk www. accountingbookkeeping. co. uk Registered Office: 19 Willow Close, Fourcrosses, LLanymynech SY22 6NF Company Number 11068331. Registered in England & Wales