Budget News – Wednesday 3rd March 2021

The key announcements in the Budget on Wednesday 3 March 2021……..

Budget Key Points.

Making Tax Digital – Facts and Fiction

All VAT registered businesses with annual taxable turnover exceeding £85,000 must comply with the making tax digital (MTD) rules for VAT periods beginning on or after 1 April 2019. For example if your first quarter, after 1 April 2019, is for the period 1 May 2019 to 31 July 2019, then the first return that you must file, under MTD, will be for the quarter ended 31 July 2019.

There are two requirements for MTD: to keep your VAT records in a digital format and to submit VAT returns using MTD compatible software. This is neither as complicated nor as difficult as it sounds; if you already record transactions on a spreadsheet based system or some form of accounting software you are already meeting the first MTD requirement.

If you currently use a spreadsheet based system you will need to buy some new MTD software to read the relevant VAT totals from the spreadsheet and submit them to HMRC as your VAT return. This type of bridging software is not expensive.

Your VAT software does not have to be cloud based and you do not need to keep your entire VAT accounting system on one software program. If you are concerned by the extra cost, then do not be bamboozled into upgrading to the latest version of your accounting software to allow you to submit vat returns under MTD. Most accounting packages allow you to download the data into a spreadsheet format (CSV) which can be read by bridging software in order to submit the VAT return.

If you need any further help with MTD, then please get in touch.