After numerous tests and a couple of pilots, Making Tax Digital (MTD) for VAT eventually went live on 1 April without much of a hiccup!
This launch means that all VAT registered businesses that are above the £85,000 threshold are now required to keep their records digitally and submit their VAT return via compatible software. Nearly 100,000 businesses have signed up so far (out of an estimated 1.2 million), with around 4,000 businesses signing up every day.
Once 'on board' you will not be able to submit VAT returns through any methods you may have used before. Be aware that if you sign up too early, HMRC will expect the return to be submitted via MTD software, which you then may not be ready for.
Because this is a new system, HMRC has said it will be taking a more relaxed approach to any penalties, as it understands it is probably going to take a good 12 months until businesses are fully comfortable with the software and the process. Let's hope they do!
We have compiled some of the most asked questions surrounding MTD to help you prepare and make any necessary changes, and have included a list of software that is “MTD-compatible” too.
What is bridging software?
HMRC has also issued some additional guidance, which also covers bridging software, and as the name suggests, this software acts as a 'bridge' between a digital spreadsheet and HMRC. So, if you are currently recording your client's financial records in a spreadsheet (like Excel or Google Sheets), you can then use the bridging software to submit the final figures to HMRC. However, for the software to be compliant it must be able to pull these figures from the spreadsheet. There needs to be that digital connection.
Wherever you may be in the whole MTD for VAT process, do not forget you can talk to us at any time if you need any help or guidance.