Making Tax Digital (MTD) will change the way your business pays its taxes to HMRC. The first of these changes will come into play on 1st April 2019 when VAT-registered businesses will be required to digitally submit their tax records to HMRC.
What does this mean for my business?
If you are a VAT registered business, you will need to move to digital record keeping as you will no longer be able to do this via HMRCs Government Gateway.
You will need to use specific software to record all your VAT invoices and receipts.
If you are not VAT registered, digital record keeping is optional but it will give you the added advantage of being able to access updated income tax estimates whenever they want, which will help with cash flow forecasting.
Review your software – is it HMRC ready?
It’s important to know that HMRC will not be developing their own in-house software for this so businesses will have to rely on existing software solutions.
One way to do this is to start using MTD-enabled software which is cloud accounting software. For a full list of software that is available now for digital record keeping, visit the Gov.uk website.
Alternatively, in the short-term you can use an API-enabled spreadsheet (meaning you can submit your records to HMRC using an API link).
What should I do now?
In order to implement digital record keeping accounting software into your business, you will need to choose the most appropriate MTD-enabled software from the Government recommended list.
This change in Software may also result in you needing to change your server to accommodate the requirements of your new accounting software.
The below table explains what you may need to consider if you use any of these existing pieces of accounting software.
Application or software |
Making Tax Digital Compatible |
Comment |
| Sage 50 Accounts (Professional, Plus, Instant Accounts) |
✗ |
This product will not be MTD compliant. Sage recommend moving to 50Cloud |
| Sage First Books |
✗ |
This product will not be MTD compliant. Sage recommend moving to 50Cloud |
| Sage 50Cloud Accounts (Professional, Standard, Essentials)Sage Business Cloud Accounting (Including Start) |
✓ |
These products are MTD-ready and can be used during the open pilot period. |
| Sage 100, Line 500 |
✓ |
There is an MTD submission module available for this product which can be used during the open pilot period. If you are using an older version of the software, you may incur an additional cost. |
| Sage Business Cloud Enterprise Management |
✓ |
Version 9 and above, of this product, are MTD-ready. However, if you are using an earlier version, you will need to purchase an additional submissions module. |
| Sage 200Cloud TASBooks |
✓ |
This is expected to be MTD-ready but cannot be used during the open pilot period. |
| QuickBooks Desktop 2019 |
✓ |
The current 2019 version of this product is MTD-ready. However, earlier versions of the desktop product will need to be upgraded. |
| QuickBooks Online Essentials and Plus |
✓ |
Both the Essentials and Plus versions of this product are MTD-ready. |
| Xero |
✓ |
All Xero subscriptions currently supporting the submission of a VAT returns will be updated for MTD VAT returns |
Other Things You Will Need To Consider
If you are considering changing or upgrading your software application to be MTD-ready, there are some other factors you should take into account. These include:
Moving to the cloud
If you are looking to move your accounting application to the cloud you need to ensure that other applications and add-ons you use are compatible with the cloud service.
Is your internet connection reliable and fast enough to cope with the new software requirements? If not, you may need to look at a line upgrade to a lease line and possibly a 4G backup connection. Neuways can help advise you on this if you are unsure how to check your line speed or how to check what the requirements of your accounting software are.
Microsoft Office Compatibility
If you are using older versions of Microsoft Office, they may not be supported by the Accounting application you require.
If you would like to discuss the MTD software options with one of our IT Specialists to help you decide which solution is best suited to your IT systems, infrastructure and business goals, call us on 01283 753333 or email hello@neuways.com
