Times are changing. From April 1, 2019- the majority of VAT-registered businesses with a turnover above £85,000 will need to change the way they run their business. They’ll need to keep their records digitally and provide their VAT return information to HMRC online using ‘Making Tax Digital’ compatible software. From April 1- you’ll have to follow the new MTD for VAT law.
There are a few things you’ll have to record digitally.
- Tax point. This is when the transaction took place. Tax point is important because it tells you which VAT period the sale occurred in, and which VAT return to file the transaction under.
- Net (including VAT). The is the price of the product or service you sell before VAT is added on.
- The rate of VAT charged. This is how much VAT you charge on top of your product/service.
This may sound overwhelming, but with the right VAT software, you’ll quickly be adjusted to the new law- and your business won’t be affected.
You may already use software to keep business records. And if that’s the case, check to see if your software provider has any plans to make their service MTD-compatible. Perhaps, you keep track of your business through spreadsheets or an in-house computer system. If this is the case- look for what is known as ‘Bridging software’.
Bridging software ‘bridges the gap’ between your existing record system and MTD-compatible software. It allows you to take the information from your regular records system and send it in the correct format to HMRC. This eliminates the need to switch over to a fully integrated MTD system.
You may want to find a software that records your transaction data, creates your VAT return and sends it to HMRC all in one place. One useful resource is the gov.uk website, which hosts a whole list of software that’s MTD approved. It’s not a comprehensive list, and it’s constantly being updated, but it gives you a few good options.
There are a few things to consider when choosing your perfect VAT software.
- Cost. By choosing an affordable software, you’ll come out with more profit at the end of the month.
- Ease of use. Don’t waste time fussing over the computer. Pick software that’s easy to use and get back to the good stuff- growing your empire.
- Security. You don’t want any of your business finance information being pried on by cybercriminals, or open to the public.
- Features of software. The best software will have a tonne of features that help you visualise, organise and complete your tax obligations, no fuss.
One of the best software’s for filing VAT is MTDfVAT. As the name suggests, it’s specifically designed to help you digitally record your VAT and send off VAT returns to HMRC. It seamlessly integrates with your spreadsheet data or other software- and is really easy to use. MTDfVAT offers software packages to suit all sorts of businesses- whether you’re a limited company, partnership, limited liability partnership or sole trader. It works if you have multiple businesses or just the one. By investing in MTDfVAT, here are just some of the tools you’ll unlock for your business.
- VAT report centre, giving you all of the most important information about your taxes.
- Dashboard view of all your sales, returns and invoices.
- Automatic validation and submission of VAT data in an MTD complaint format.
- Dashboard view of all VAT payments and refunds.
- Import data from CSV, Sage and other bookkeeping software.
Most importantly, MTDfVAT is secure- using secure UK Amazon servers with strong encryption protocols in place.
We hope this article has given you some important insight on that law that’s coming into place April 1. If you’re not already preparing for the change, start thinking about your VAT return software today.