MTD: What, when and how by Alex Chrysostomou
12th October 2018
12th October 2018
Alex is a local account based in Palmers Green. He contributes regularly to our Palmers Green and Southgate LIFE magazine
If your business is VAT registered, and the turnover for the last year has exceeded£85,000, you should soon receive a letter from HMRC stating that you must comply with the making tax digital (MTD) rules from April 2019.
The MTD regime requires you to keep all records relating to VAT in a digital format and submit VAT returns through MTD-compliant software. The online VAT return form on gov.co.uk will be closed to all businesses required to comply with MTD for VAT regime. This is because HMRC wants to minimise the risk of human error in submission of VAT figures.
The online form will remain open for businesses who have voluntary registered for VAT and whose annual turnover is under £85,000. But beware, as soon as your turnover for the last 12 months exceeds £85,000 you must comply with MTD from the start of your next VAT period.
You are responsible for keeping your business records in a digital form. This means the data recorded from each transaction electronically. You don’t have to take a picture of each purchase receipt and sales invoice, but you must record the date of the sale, value excluding VAT and the VAT rate applied. Shops which use retail schemes can keep a digital record of the gross daily takings, so don’t have to record each sale separately.
Some businesses will prefer to use cloud-based accounting which enables people at different locations to access the data simultaneously. The account software will also automatically provide a back-up of the data. We have found that most small business are comfortable using the Xero bookkeeping software which caters for these changes and ensures that you’re compliant with the changes.
Alexander Associates, your local accountant
24A Aldermans Hill, Palmers Green, London N13 4PN Tel: 020 8882 6611 Fax: 020 8882 6621