Making Tax Digital: Your final checklist

If you’re a business owner, chances are you’ve been bombarded with information about Making Tax Digital (also known as MTD). For the first batch of businesses affected, the deadline passed a few weeks ago, but not everyone has had to complete their VAT return yet. So we wanted to pull together an easy-to-understand ‘cheat sheet’ for those concerned to check, double check and triple check before MTD comes into play for you. If there’s one thing you want to be prepared for, then it’s this.

1. Will my business be impacted by Making Tax Digital?
Let’s try and make this as simple as possible. From April 2019, if your VAT turnover is above £85,000, you have to submit your returns digitally via software. Find out if your current software set up is compatible in point three.


2. What will be my first tax return date under the new Making Tax Digital scheme?
Making Tax Digital kicks off on the 1st April, but that doesn’t mean that your first VAT return is due then. It all depends on when your VAT quarter ends or if you’re doing monthly VAT returns. Below are the official HMRC dates, to help you figure out when you need to start:

  • For monthly VAT returns, your first MTD return was due April 2019
  • If your quarter ends in January, your first MTD return is due July 2019
  • If your quarter ends in February, your first MTD return is due August 2019
  • If your quarter ends in March, your first MTD return is due June 2019


3. How do I know if my software is compatible?
Not every kind of software is compatible with the new Making Tax Digital programme, so you need to make sure you’re using the right tool to keep your digital records. To see whether your current software is compatible, it’s an idea to speak to your software provider, or check the list of compatible software here. If you’re a Cashplus customer, then you’ll have access to special offers with Sage Accounting and KashFlow Accountancy software. You can find out more information about these offers in the Marketplace section of our Online Servicing site and mobile app.

If you’d prefer to continue using spreadsheets to keep records, and have decided against moving fully over to a software package, you could always go down the ‘bridging software’ route. This is a tool that can communicate with HMRCs systems for Making Tax Digital, whilst not requiring you to abandon your spreadsheet records. It basically extracts data from your spreadsheet records and files it digitally to HMRC in a compatible format. You can find a list of bridging software here, just use the filter on the left hand side to narrow your results down.  


4. Review your processes for Making Tax Digital
You should think about how you currently manage your VAT returns and if that can be easily transitioned into the new digital process. There may be teething issues with buying new software and figuring out how to use it, or you may have to train more staff on an existing software package. Any issues will need to be ironed out before your first return is due. Something that will prove beneficial is making as many of your payments as possible digital, via bank transfer, or using your card, as opposed to cash. By doing this, it’ll be much easier to audit any statements or provide evidence for any purchases.

The switch from more manual processes to a more streamlined and digital way of doing your VAT returns could take some getting used to, but the government hopes that there will be benefit for everyone involved. We wrote an article back in 2018, looking at the broader impact of Making tax Digital.




This content was created on 26th April 2019

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