Making Tax Digital (MTD)

"building a trusted, modern tax administration system" is the governments philosophy behind Making Tax Digital (MTD), Books and Business can help you get MTD compliant, with packages available to suit all needs and budgets.

MTD in a nutshell means no more paper records, everything is digital including sending VAT returns, this makes the process of submitting VAT simpler,  which in turn saves you time and reduces errors on your VAT return as everything is in real time.

 

From 1st April 2022 all VAT registered businesses, as in businesses who charge VAT, no matter what their turnover, had to be signed up and comply with MTD.


So what do you need to do to comply with MTD for VAT?

  • Keep digital VAT records
  • Use a third-party software that is HMRC compliant to digitally submit your VAT returns

 

What software should I use and is it compliant with HMRC?

HMRC have put together a list of all the software that is compatible with MTD, visit HMRC’s page here to find out if your software or the software you are  considering using is suitable for MTD.


If you prefer, there is still the possibility of continuing to use spreadsheets to calculate your VAT, including what you need to send to HMRC for MTD but you'll have to use compatible software like QuickBooks or Xero to pull this information from your spreadsheets directly through to HMRC. Depending on how you currently calculate your VAT you may need what HMRC calls 'bridging software', which converts your records to the correct format before being submitted digitally.

 

What records do I need to keep digitally?


In your digital account you must keep the following (according to HMRC):

  • your business name, address and VAT registration number
  • any adjustments you make from calculations done outside your software for any VAT accounting schemes you use
  • the VAT on goods and services you supplied, meaning everything you sold, leased, rented or hired (supplies made)
  • the VAT on goods and services you received, meaning everything you bought, leased, rented or hired (supplies received)
  • any adjustments you make to a return
  • the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you bought and sold
  • the rate of VAT you charged on goods and services
  • your reverse charge transactions, where you record the VAT on the sale price and the purchase price of the goods and services you buy
  • copies of documents that cover multiple transactions made on behalf of your business like those made by volunteers for charity fundraising, a third party business or employees for expenses in petty cash


Its not as tricky as it seems!


It may all sound complicated but it really is quite simple, if you are thinking of using QuickBooks as your MTD software, Books and Business offer extensive training. We can demonstrate how QuickBooks works from the initial set up through to reconciling all your accounts and submitting that all important VAT return. We offer a number of packages to suit different needs and budgets.

 

For now MTD is just for VAT submissions,  non-VAT registered businesses have until April 2026 to get on board with MTD for Income Tax (ITSA) but it would be wise to get things in place well before the deadline.


Whatever stage you are at, be it you haven’t even started thinking about MTD or perhaps you already have QuickBooks in place but you haven’t quite got your head round it, our packages can be tailored to your needs.

If you need help with Making Tax Digital then please drop us a message here or send an email to admin@booksandbusiness.co.uk with all your details and we will be in touch with a quote and to discuss how we can help.
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