VAT REGISTERED BUSINESSES
Making Tax Digital is new system that requires businesses to report into HM Revenue & Customs on a quarterly basis.
From April 2019, vat registered businesses with a turnover above the Vat threshold will be required to submit Vat Returns digitally.
The first Vat Returns to be filed under the new system will be quarter ended 30th April 2019.
No free software will be available and the HM Revenue & Customs (HMRC) existing Vat portal will be closed to businesses over the threshold.
So… it will be necessary for businesses to use a commercial software solution that meets the requirements of HMRC. We understand that HMRC is working closely with software providers to ensure that a range of solutions are available.
The software will be required to receive information from HMRC via the API (application programme interfaces) platform.
The software will hold the audit trail of transactions that make up the summary Vat Return. It is essential that the quarter end transactions are fully complete, accurate and reconciled before the Vat Return is sent to HMRC.
What Action do I need to take ?
Review existing record keeping procedures.
Manual records are simply no longer an option.
Spreadsheets are permitted but will be required to be combined with third party software to use APIs.
The recommendation from McManus Hall is that fully reconciled books and records are maintained on a commercial software such as Xero.
Many businesses will require training to ensure quarter end reconciliations are undertaken to an adequate standard.