Making Tax Digital (MTD) came into effect from 1st April 2019, making all VAT registered businesses with a turnover of over £85,000 obligated to use digital software to store and submit their tax records to HMRC. MTD essentially aims to reduce the risk of fraud, increase transparency, and make processes easier and quicker.
You might even remember us talking about it way back in October last year, when we found that not many businesses were actually ready for MTD. So now the scheme has gone live, what happens if you haven’t made the switch to digital?
Well, first of all – don’t panic! Mazuma are here to save the day (cue superhero music) and give you some tips on what to do next.
Are there any exceptions?
Oui! You don’t have to comply with MTD if:
- Your company is going through an insolvency – which for the record, we hope it’s not!
- Your beliefs are incompatible with keeping electronic records and communicating digitally.
- It’s not reasonably practical for you to use digital tools to keep business records. This could be due to age, remoteness of location, disability, among many other things – if you want more info, you can always get in touch.
If your business falls into any of these categories, you can relax – no MTD for you. But if your company doesn’t fit these categories and has an annual turnover of £85,000, you’re not exempt – sorry!
Does the April launch date apply to you?
HMRC have been kind enough to issue a six-month deferral for around 40,000 businesses in the country. If you fall into one of these categories, you don’t have to comply with HMRC until October 2019:
- ‘Not for profit’ organisations that aren’t companies, including some charities
- VAT divisions and VAT groups
- Public sector entities (but only those that provide additional information alongside their VAT returns)
- Those required to make payments on account
- Local authorities
- Overseas traders
- Public corporations
- Annual accounting scheme users
You should have had some form of communication from HMRC telling you if you fall into this bracket. It’ll most likely have been a letter, and you need to keep your hands on this as it’s proof of your deferral. If you didn’t receive one but think you’re qualified to a deferral, you can contact the VAT helpline for more information.
What should you do if you’re not setup for MTD?
If you qualify for MTD but haven’t put any new systems in place, don’t fret. HMRC is taking what we like to call a ‘light touch’ approach for those who haven’t had the chance to implement a new system – but only so long as you can prove you’ve made a reasonable effort to comply with MTD. If you’ve done nothing to move towards a compliant digital system, HMRC could come down on you quite hard!
Join the Mazuma gang
If you haven’t made the switch, or are struggling to keep up with your new system, speak to Mazuma! They make life easier for you and take the stress and hassle away – no more worrying about making sure you’re compliant or that HMRC are going to come knocking on your door. What a relief, eh?!
Originally featured on the Mazuma website.