Who is affected by Making Tax Digital?
All UK businesses that are VAT registered and earning above the £85,000 VAT threshold are now required to keep accounting records digitally and submit their VAT returns to HMRC with specialised cloud accounting software.
The government will be introducing the digital system for all VAT-registered businesses with a taxable turnover below £85,000 by April 2022.
All self-employed, partnership businesses and landlords with annual business or property income above £10,000 will need to follow MTD Income Tax rules for their next accounting period on or after April 2023.
Making Tax Digital for Corporation Tax will not be mandated until at least April 2026.
It is vital to establish how you will comply with these new regulations and make sufficient plans and decisions in readiness for these changes.
Honey Barrett fully understand how demanding running a small business can be. We are here to help alleviate any concerns you may have about managing your records digitally.
How will I submit my VAT returns to HMRC?
Affected businesses must use HMRC compatible accounting software or appoint an agent to submit returns to HMRC on their behalf.
From April 2022 all UK businesses that are VAT registered will be expected to submit their records digitally, every quarter.
Paper records will no longer meet the legal requirements in tax legislation.
Whatever the size of your company, Making Tax Digital will ultimately affect your business. Call our offices today and one of our team of experts can help you submit your VAT returns and prepare you for the new system.
Which online software package is best for my business?
There are a variety of MTD compatible software packages available including Xero, Sage Business Cloud and QuickBooks Online.
If you are currently using a compatible cloud accounting software package you are already halfway there. Honey Barrett are experts in cloud accounting and can help you to comply with the regulations with very little impact to your business.
Contact Honey Barrett and one of our team of experts will be able to advise you on the most suitable digital software package for your business and offer guidance, training and support throughout the transition and thereafter.
I’m not VAT registered, will this affect me?
From April 2023 all self-employed, partnerships and landlords will need to comply, regardless of whether they are VAT registered or not.
We have already helped many clients make the change and embracing this move early on is the best way to prepare to stay compliant, but also to unlock the key business benefits of effective planning, forecasting and budgeting. By adopting a cloud accounting platform you’ll keep a closer eye on your finances and have advance warning of future tax obligations.
Will there be penalties if I don’t comply?
In 2019 the government introduced a ‘light touch’ approach to penalties in the first year of MTD for VAT, with no filing or record-keeping penalties to be issued to businesses that are doing their best to comply. There is no soft landing for late payment penalties. This period was then extended to allow for difficulties during the Covid pandemic.
While the government has allowed for these leniencies in the past, they will not concede any breaks for businesses that do not pay their VAT bill on time or make any effort to comply.
Therefore, let Honey Barrett relieve the everyday pressures of running a small business and take care of your company’s financial requirements, so that you can concentrate on the important job of running your business successfully.
How can Honey Barrett Chartered Accountants help?
Honey Barrett has a great team of VAT and cloud accounting specialists who have the knowledge and expertise to make transitioning to Making Tax Digital stress free and simple.
With our friendly and approachable manner, we’re able to advise on and discuss your options to ensure a proactive approach is taken to address these mandatory changes.
What should I do next?
Contact us today and one of our Making Tax Digital Advisors will be more than happy to talk to you about Making Tax Digital, offer advice on the most compatible cloud accounting software for your business and answer any further questions you may have.