“If you have a business that has a taxable turnover above the £85k threshold, then Making tax digital will affect you. This means that you must keep and preserve certain records and accounts digitally, using functional compatible software.”
What do I have to do now?
These are the steps that you should follow:
- Check if MTD applies to your business.
- Find the right software or check to see whether your existing software is MTD compliant.
- Register for MTD.
- Link your software to your government gateway account.
Step 1 – check whether you need to register.
If you are unsure whether you have to register, use this link. It takes you to an HMRC website page that gives details on whether your business qualifies.
Step 2 – MTD software.
Xero is fully compliant with MTD for VAT. If you use any other software, use this link to check to see if your software is compliant. If it isn’t, then I recommend contacting your supplier for further information.
Step 3 – Register.
Sign up for Making Tax Digital for VAT at least one week before your VAT return is due.
You’ll receive an email within 72 hours to confirm that you can submit returns using your software. After you’ve signed up, you can’t use VAT online services to send VAT Returns.
Follow this link to register: https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat
Step 4 – Link your software to your HMRC account.
Each piece of compliant software will have a help file that will explain how to link it to your account.
If you use Xero:
- Log into your Xero account.
- Click on Accounting, then reports.
- Go to your VAT return screen.
- Click on the button that says “Set up MTD for VAT in Xero.”
- You will be taken to your HMRC login. You will need your Government Gateway username and password to complete this step.
- Login in and follow the onscreen instructions.
You are now done. You will need to confirm your software link every 18 months, but other than that, you are ready for MTD.
Xero has created a series of web pages that answer any further questions that you may have. There is also a series of videos produced by HMRC to help you with your MTD processes, follow this link for more information.
- On June 21, 2019