Making Tax Digital
From 1st April 2019, all businesses with a turnover above the VAT threshold were required to store their financial records digitally. There is a further requirement to submit VAT Returns to HMRC from a MTD-complaint accounting software.
Three months on every business meeting the above will now be filing using MTD-Compliant software. For many there was no real change, as the leading software providers were already submitting the data correctly (Just without calling it Making Tax Digital).
What does this change mean to the average business? Those businesses who do not use a MTD-Compliant software are using "bridging software" and this has become more and more popular amongst much smaller businesses.
A number of the software companies are being prophetic in predicting that HMRC are going to ban the use of bridging software. HMRC have ruled out this myth stating that
"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 within the MTD for VAT service."
We have seen an increase in the use of software to provide real time data to HMRC, with RTI, now MTD. What could be next?
Corporation Tax RTI?
Self Assessment RTI?