Submitting VAT returns went digital on 1st April, 2019. At least for all businesses with a turnover in excess of £85,000. But all businesses – from sole traders to big corporates – need to be aware that digital tax submissions is changing on a huge scale.
A business needs to be aware and prepared for the changes that are ahead. In fact, the entire tax system in the United Kingdom is changing. MTD for VAT was just the beginning – but more on that later.
Her Majesty’s Revenue and Customs (HMRC) has already told us about sweeping changes that are to come over the next four or five years. The initiative is to make tax and the way we submit the returns digitally.
This will spell the end of manual records, books with ledger written on the front, spreadsheets will be kept but only for personal use, some accounting systems and whatever else happens to be anything other than MTD for VAT software.
If you have a business that generates an annual turnover in excess of £85,000, it will have been mandatory to have switched to keeping records like the tax returns digital. This was implemented back in April, 2019.
Even if your business is not VAT-registered, the time will soon come when tax affairs will have to be submitted digitally. The entire initiative is make the system more efficient and effective. But the whole dynamic concept of MTD is not there to make things inconvenient and cumbersome for the businesses.
Indeed, many users are saying how much easier life is now that the tax returns are being kept digitally and everything seems to be in one place. It will certainly do away with the filing departments that once graced every office across the land.
There are still some businesses that have not yet migrated over to the new system. County and town councils, some charities and not-for-profit organisations will still have another six months to prepare for the essential handover to MTD for VAT.
Making Tax Digital software does not just feature tax returns templates. There are Self-Assessment tax returns sheets, a system to migrate old spreadsheets into the new format and many other tax forms (Partnership Trusts and Sole Trust) submissions.
A business can ill-afford to overlook MTD software. It is crucial for record keeping and accounting purposes. Moreover, it is now the law.