• 0116 246 4152
  • This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Mon - Fri - 9am - 5:30pm

Making Tax Digital - mythbuster

Making Tax Digital - mythbuster Making Tax Digital - mythbuster

Since 2019 businesses above the VAT threshold are required to keep their records digitally and submit their VAT return using compatible software.

Myths

Under Making Tax Digital (MTD), businesses will have to provide more information than they already do

This is not correct: no business will need to provide information to HMRC more regularly than they do now, nor send any additional information.

Businesses above the VAT threshold can choose not to join MTD and continue to submit returns as they always have done.

This is not correct: businesses above the VAT threshold were required to join MTD and submit their VAT returns using the new service for their first VAT period which began on or after 1 April 2019. Most businesses have signed up, but any business yet to do so should join MTD urgently.

MTD won’t reduce errors

This is not correct: keeping records on paper and submitting VAT returns to HMRC manually results in errors – in a YouGov poll 61% of businesses said they have previously lost receipts– and errors also occur in the manual transposition of data and manual calculations.

MTD offers a more integrated approach to business administration and tax, reducing the time businesses spend on administration in the longer term and making it easier for them to get their tax right.

HMRC has underestimated the administrative burden and costs to businesses for MTD

This is not correct: there are MTD-compatible solutions available at no or low cost for most businesses, including 14 products that are available for free, with varying conditions of use.

Costs will differ from business to business and are influenced by the size and complexity of the business and their degree of digital capability, as well as the type of functionality they want their software to include. Most businesses will be able to claim any costs for hardware and software against their tax.

Small businesses should be automatically exempt

This is not correct: the smallest businesses are currently exempt from MTD but can join voluntarily.

More than 280,000 businesses below the VAT threshold have already chosen to sign up and experience the benefits digital record keeping has to offer, in advance of MTD being extended to those below the threshold in April 2022.

Businesses that cannot go digital will not be required to do so.

This is not correct: businesses have until their first VAT return‎ period starting on or after 1 April 2021 to put digital links in place between software products (existing links must be maintained), but it is prudent to put these links in place now.

Eventually you will not be able to use spreadsheets or bridging software under MTD

This is not correct: businesses can choose to use spreadsheets to both maintain digital records and perform tax calculations, provided the spreadsheets combine with some form of ‘bridging’ software that will allow their VAT return data to be sent to HMRC from the spreadsheet.

It is not true that HMRC sees the use of spreadsheets or bridging software for MTD as a temporary arrangement. There is no set end date for the use of spreadsheets or bridging software with the MTD for VAT service.

However, users will get the maximum benefits from MTD – fewer errors, increased productivity and better financial planning – by using dedicated MTD software.

This provides the full end-to-end experience, from digital record keeping to sending the return to HMRC. We recognise that for some businesses ‘bridging’ products, which work by linking and extracting data from other software products and spreadsheets to submit the returns, will be the simplest way to comply with the new requirements.

Read 202 times Last modified on Monday, 27 July 2020 07:05
© 2020 Watergates Ltd. All Rights Reserved.