The first phase of making tax digital VAT will come into force from April 2019. HMRC had delayed the date, but they are now working closely with software companies to achieve the new deadline.
Making Tax Digital what does it mean for me?
If your business has income over £85,000 per year, you must register for VAT. All VAT registered businesses over the threshold must use an accounting package to upload their VAT to HMRC’s records from April 2019. At the moment around 71% still log in to HMRC to declare VAT.
What costs are involved?
If your small business already uses an accounting package, check if they are going to meet the deadline. Most of the well-known ones are already on the list including Quickbooks, Sage, Xero, Clearbooks and Quickfile. Each of these packages has a monthly subscription which will vary depending on the size of business, amount of transactions and if you require any add-on features.
For a business not using accounting software the first step would be to talk to your accountant to see if they recommend a package. On the whole, most accountants will be able to use any accounting software, but a few have their favourites. The first step would be to take a free trial to see if the package suits your business needs.
Can I complete MTD VAT Myself?
If you are confident with setting up and using the software, there is no reason why not. Many businesses both self-employed or Limited company run their accounts internally. To ensure you do not get charged penalties, and interest VAT deadlines are important.
Making Tax Digital VAT – Free Software
One of the best free accounting software packages I have used as a bookkeeper is Pandle. I recommend it to small businesses and enterprises as it is fairly easy to setup and use. Pandle are planning to comply to HMRC for making tax digital VAT when it comes into force, but worth checking with support before using it. Pandle offers most of the features that a subscription package has including invoicing, statements, VAT and reports. It has some paid for features which include an automatic bank feed, forecasting and projects.
MTD below the VAT Threshold
If you are below the £85,000, the deadline will not affect you, but it is worth preparing in advance to switch to digital accounting. One of the concerns in the bookkeeper’s forums is that there will be a large influx of businesses needing help to become compliant. Bookkeepers can already have enough clients that they can’t take on any more work.