MTD for VAT - businesses with turnover below £85k
MTD for VAT: In the final stage of the Making Tax Digital for VAT rollout, UK businesses with a taxable, annual turnover below £85,000 are now subject to the new electronic filing requirements.
There have been concerns that some smaller businesses may struggle/be unwilling to adapt to the new requirements, and according to HMRC, only around a third of VAT-registered businesses with taxable turnover below the threshold voluntarily signed up to MTD for VAT ahead of the deadline.
Under the new regime, businesses must file returns using one of two solutions. The first, is a bridging tool. It works by connecting non-compatible software such as Excel spreadsheets to HMRC’s systems. Alternatively, businesses can use one of several HMRC-recognised and fully compatible MTD software solutions. These more sophisticated solutions come with a range of forecasting and record-keeping functionalities.
Although the changes may seem daunting, progressing your business systems to accommodate the change could have other advantages for your business. Using an MTD compatible bookkeeping software such as Xero (for example) might help when making other strategic decisions for your business; facilitated by the reports, real-time information and other tools that come as part of the software.
If you would like advice on the best technology solutions for your business, please don't hesitate to ask us.