What is Making Tax Digital?

From April 2019 HMRC will require all businesses over the VAT threshold (£85,000) to submit their returns digitally
• This is the first step in HMRC’s plan to digitise the entire tax system
• If you currently record your VAT on paper you will need to start recording it digitally
• It will no longer be possible to submit VAT returns using the Government Gateway portal

Why is Making Tax Digital happening?
• HMRC wants to make the UK tax system the most efficient in the world
• Currently they believe there is a short fall of £9 billion in unpaid tax
• They believe that introducing a digitised system will make it more
effective, more efficient and easier for taxpayers to get it right
• VAT is only the first stop, HMRC will be introducing Making Tax Digital
for Income Tax and Corporation Tax in the future

What is a digital record?
• In order to submit your VAT returns digitally, you must record your transactions digitally
• The digital record must include your business name, primary business, VAT reg number and the VAT scheme you are using
• The software you use must also be compatible with HMRC

What software is compatible?
• HMRC is working with more than 150 software suppliers
• Software suppliers include; IRIS, Sage, QuickBooks and Xero
• If you currently use us to submit your VAT return you will not have to do anything
• You can find a list of approved software in the Making Tax Digital guide

How will this affect me?
• Currently over half of businesses with turnover above the VAT threshold use software to submit and record their VAT
• If we do your VAT return and you currently record your VAT using paper records you will need to start recording them digitally
• If you are already recording your VAT digitally and/or using software all you will have to do is pass that information on to us or check that your software is compatible
• The Government Gateway will be closed for VAT returns from
1 April 2019
• You will need to use software that communicates digitally with HMRC’s platform and not by manually entering the VAT return figures on the portal
• There will be a ‘soft-landing’ period throughout 2019 where you can use ‘copy and paste’ but from 2020 onwards the software you use must be fully compatible

Positives
• You can get rid of your non digital records
• Free up time, you can do MTD on the go, anywhere, any time
• KashFlow is a duel user so you can see it and so can we, meaning we can support you every step of the way
• You will save approximately 27.5 days a year by switching to digital technology

What will happen if I don’t comply with MTD?
• HMRC will be introducing a penalty system in 2020 for those who do not comply with MTD
• Every time you submit an MTD report late you will gather points
• Once a certain points threshold is reached, a financial penalty will be applied
• For VAT the points threshold is expected to be 4 points which is the equivalent of a full years worth of returns
• The Federation of Small Businesses estimate that the total cost of MTD will be £2,770 per year per business
• This includes software costs as well as a rise in accountancy fees
• MTD will require more staff per client as there is a higher level of compliance
• We can work with you to find a solution that works best for you, either moving you to a Direct Debit payment plan or helping you move onto MTD compatible software

Our solution
• We are now a Cloud Accountancy firm and will be using IRIS KashFlow to efficiently manage bookkeeping for all of our clients
• KashFlow can be used by you as well – if you want to manage your own bookkeeping
• We will also be providing you with IRIS Snap – a mobile app that allows you to take pictures of receipts and send them directly to us

Our mobile MTD solution
• We can visit your workplace or office with our personalised mobile MTD system, where we will scan all your paper documents and then upload them straight to the cloud
• This means that you won’t have to worry about digitising your VAT records yourself
• The whole process will take under an hour
• We also have a Bailey Group App where you can access your client account and speak to us direct

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