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
Bains Financial Management Chartered Management Accountants
T : 07983 938173 • Email : info @ bains-fm . co . uk • www . bains-fm . co . uk 3 Oswin Road , Leicester , LE3 1HR