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Making Tax Digital
MTD

Making Tax Digital

The government’s Making Tax Digital (MTD) initiative has progressed more slowly than originally planned, but it is moving forward, and will continue regardless of Brexit. The first area where MTD will impose new obligations is VAT.

Except for a small minority, since April 2019, VAT registered businesses with an annual turnover above the VAT threshold (£85,000) have been required by law to use MTD to meet their VAT obligations. This involves setting up a digital tax account and filing quarterly returns online, using an accounting system or app that is integrated with the new digital gateway that HMRC is building. HMRC will also want online access to transaction details and VAT calculations.

This MTD hub will provide you with updates, insights and will answer the most commonly asked questions.

If you would like any further information about Making Tax Digital, please get in touch with one of the team members below or use our enquiry form.

Insights

Making Tax Digital and VAT: getting ready for April

Making Tax Digital (MTD) for VAT is imminent. VAT-registered businesses with a taxable turnover above the VAT threshold are required…

Petra Deters March 2019

Making Tax Digital and VAT: the ‘soft landing period’

HMRC recently published a notice giving guidance on the digital record keeping and return requirements for Making Tax Digital (MTD)…

Raphael Suissa January 2019

Budget 2018: summary

The sun was already edging behind the London skyline by the time Chancellor Philip Hammond rose to the despatch box…

Anthony Newgrosh October 2018

MTD: Minimising The Delays?

VAT registered businesses with an annual turnover above the VAT threshold (£85,000) will be required by law to use Making…

Petra Deters October 2018

Making Tax Digital and VAT: getting the right software

The government’s Making Tax Digital (MTD) initiative is progressing more slowly than originally planned, but it is moving forward, and…

Petra Deters September 2018

Making Tax Digital and VAT: are you ready?

Over the next few years, the government’s Making Tax Digital (MTD) initiative will make UK tax administration very different for…

Petra Deters May 2018

Making Tax Digital: more time to prepare for HMRC’s changes

The machinery of the UK tax system is going to change. Although there will be no change in the underlying…

Jason Appel August 2017

MTD Timeline

MTD Team

Petra Deters
Director of Outsourcing

T   +44 (0)20 8922 9370
E   petra.deters@bkl.co.uk

Expertise
Outsourcing

View profile
Raphael Suissa
Adviser, VAT

T   +44 (0)20 8922 9143
E   raphael.suissa@bkl.co.uk

Expertise
Property and Real EstateConstructionCharities and other not-for-profit organisationsVATConsultancy advice to tax professionals

View profile
Stuart Batkins
Director of Client Services

T   +44 (0)20 8922 9343
E   stuart.batkins@bkl.co.uk

Expertise
Property and Real Estate

View profile

Frequently Asked Questions

What’s the thinking behind MTD?

MTD is the government’s initiative to get all taxpayers (individuals and businesses) a digital tax account, giving them the ability to submit tax returns online. The aim is to modernise and improve the UK tax system.

How will MTD benefit me?

Once you’ve got used to the new way of doing things, going digital will mean:

/ Greater efficiency

/ Fewer errors in your data, as you and HMRC share the same data

/ HMRC will be able to approve refunds that currently cause extra checks more quickly

/ More free time

With the aid of cloud based software, you will have convenient access to your data from anywhere. This software will also make it easier for your business to record and file your tax returns online.

When did MTD start?

MTD for businesses began on 1 April 2019 with VAT: you probably noticed the timeline further up this page.

Other areas of MTD, such as income tax and corporation tax, have been put on hold until April 2021 or later. We’ll be keeping this page updated with details as HMRC releases them.

My business is registered for VAT. How will MTD affect me?

If you have a VAT registered business with an annual turnover above the threshold of £85,000, you need to keep digital records and submit VAT returns using compatible software.

This involves setting up a digital tax account and filing your returns online using an accounting system or app that’s integrated with the new digital gateway that HMRC is building.

HMRC will also want online access to transaction details and VAT calculations. Paper records will no longer be sufficient.

What should my business do?

You need to ensure that the software you currently use is MTD compatible. If you’re used to submitting VAT returns on spreadsheets, you will need ‘bridging software’ to bridge the gap between Excel and HMRC’s system.

What if I already use a software that submits my VAT returns online?

If you already use appropriate software then this is a good start, but you may still need to upgrade your software so that it can connect to the new HMRC gateway. As MTD progresses you may also have to change the way you connect transactions that are recorded in a different software (e.g. supplementary calculations in Excel or sales systems).

Our MTD team would be happy to advise you on this: please use our enquiry form to get in touch.

What if I want to sign up for MTD myself?

If this is the case then you will need the following:

1. MTD compatible software
2. Your government gateway login details
3. Email address connected to your government gateway
4. Business type (e.g. Limited company)
5. Company Registration Number (as per Companies House)
6. UTR (10-digits)

Then visit the government’s website and complete the questions with the above information.

You will be asked to agree to receiving information by email and to confirm the email address. HMRC will then send you an email for verification and you must click on the link provided in that email.

This will then take you to the final sign up page asking you to confirm you want to join the pilot. Once you select to join the pilot it will take 72 hours for HMRC to confirm that you can take part in the trial. Once you receive that notification by email, you need to follow the instructions within your software.

We expect that the pilot will automatically switch to live.

What happens if my business doesn’t comply?

There is likely to be a grace period for businesses to put in places their new systems, but after that there will be penalties for business that don’t comply with the MTD regulations.

What about businesses that fall below the threshold?

If your VAT-registered businesses falls below the £85,000 annual turnover threshold, you will not need to be compliant until 2020 or later. Even so, we’d advise you to make sure you are prepared as soon as possible. Our MTD team is available to help: please get in touch via our enquiry form.

What about MTD for individuals?

As an individual taxpayer, you will need to use a personal tax account through HMRC. This will bring together all your details in one place: more convenient for you and more efficient for HMRC.

For individuals who are self-employed and individuals who have a rental property, quarterly accounting will not come into effect until at least 1 April 2021.

Details are yet to be confirmed but you will have to report your income and expenses quarterly to HMRC.

Keep an eye on this page for the the latest news.

I have another question about MTD.

Frequently asked or not, we’d be happy to help answer it. You can contact a member of our MTD team as listed on this page, or you can use our enquiry form.

Working with technology

Under the new system, you will have to ensure your software is compatible with MTD. If you’re used to submitting VAT returns on spreadsheets, you will need ‘bridging software’ to bridge the gap between Excel and HMRC’s system. If you are using a bespoke software or ERP system, it is worth checking with your software provider what their plans are and if they will be able to upgrade the software in time.

The most reliable alternative is cloud based (online) accounting and bookkeeping software. Leading providers including Xero have confirmed they will be compatible with MTD by April 2019: you will be able to submit directly from their software and meet HMRC requirements.

If you’re not using online software yet, the prospect shouldn’t worry you. It’s an opportunity to become more efficient and more profitable. Both are things we are pleased to support our clients with: we work closely with our recommended provider Xero, as one of their platinum partner firms.