STYLES & ASSOCIATES
ACCOUNTANCY SERVICES
Serving businesses in Alton, and throughout Hampshire
Making Tax Digital.
HMRC’s Making Tax Digital rules came into effect on 1st April 2019 for VAT registered businesses with a taxable turnover over £85k. The HMRC initiative aims to make it easier for 'individuals and businesses to get their tax right and keep on top of their affairs’ by using online accounting software.
Cloud based accounting.
Keeping online records of your finances allows you centralise, standardise and automate tax records and submissions. The government hopes MTD will make tax administration:
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more effective
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more efficient
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easier for taxpayers to get their tax right
The MTD rules have two key requirements:
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require businesses to keep digital records
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submit VAT returns using HMRC recognised compliant cloud based software, like Xero, QuickBooks, Sage, FreeAgent, Zoho Books and KashFlow which are able to record and preserve digital records, and send and receive information via HMRC’s interface.
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At Styles & Associates we work with HMRC compatible online accounting software and are a Xero bronze partner. Whatever software you use our knowledgeable team will be able to manage your online financial records and VAT returns.
Even if you are VAT exempt online accounting software will help you keep on top of your financial records and make submitting your tax records a more efficient process.
What records are included in the Making Tax Digital rules?
You need to keep the following records digitally:
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your business name, address and VAT registration number
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any VAT accounting schemes you use
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the VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)
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the VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)
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any adjustments you make to a return
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the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
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the rate of VAT charged on goods and services you supply
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reverse charge transactions - where you record the VAT on both the sale price and the purchase price of goods and services you buy
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your total daily gross takings if you use a retail scheme
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items you can reclaim VAT on if you use the Flat Rate Scheme
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your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme
Who is exempt from Making Tax Digital rules?
If your business taxable turnover falls below £85k you do not have to file a VAT return. HMRC state: “exemptions from MTD for VAT are the same as those that are already in place for online filing for VAT”.
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Businesses that are classed as exempt from VAT do not have to comply with the MTD rules. These include:
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Insurance, finance and credit.
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Education and training.
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Fundraising events by charities.
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Subscriptions to membership organisations.
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Selling, leasing and letting of commercial land and buildings (although this exemption can be waived).
From 1 April 2022 all VAT registered businesses must sign up, whatever they earn.
If you need to move to an online or cloud accountancy platform get in touch with Styles & Associates to discuss your requirements. We can help guide you through the process and ensure you are compliant with the MTD rules.
