HMRC’s public pilot for MTD for VAT arrives
The Making Tax Digital for VAT public pilot has arrived and it’s open for business.
It’s good news to see the process moving forward in the right direction.
HMRC officials stressed that eligible businesses and agents shouldn’t leave preparations to the last minute and encouraged them to join the pilot as soon as they can. We would echo that and believe practices should be encouraging their clients to sign up today.
Speaking to customers at IRIS World and gathering feedback on surveys showed us that accountants are increasingly ready for the biggest reform in decades.
And there’s been a huge flurry of sign ups to use our new VAT Filer solution since we announced it last week at Twickenham. This gives accountants the new bridging software they need to meet the new rules and over 200 have already signed up so they can take part in the HMRC pilot.
HMRC is inviting more than half a million businesses to try MTD ahead of the new rules coming into force in April 2019. At that point, one million firms registered for VAT with a taxable turnover above £85,000 will need to keep their VAT records digitally and file their returns using Making Tax Digital-compatible software.
Most businesses affected will already be making quarterly VAT submissions so it is not going to be a big change, albeit new technology used to make these submissions is required. The big difference is they need to keep digital records. Larger businesses will have to move away from paper record keeping and that’s a good thing in the long term because of all the challenges this system represents.
MTD is going to be a great opportunity for accountants – rather than something to fear - and this is reflected in our customer polls that we took during IRIS World. These showed 56% believe the new rules will help grow their client base.
The HMRC pilot opened yesterday for around half a million businesses whose affairs are “up to date and straightforward” and this will extend to most other business types over the coming months. HMRC also revealed that, after concerns were raised, it has decided to give a small group of customers with more complex requirements a further six months to prepare.
Theresa Middleton, Director for Making Tax Digital for Business, raised a good point in the official statement when she said that millions are already banking, paying bills and interacting with their suppliers and customers online.
She said: “Using digital tools to help businesses manage their business income and expenses and get their tax right builds on this momentum and will also help them get more control over their finances.”
She’s right. It’s part of everyday life already and MTD is the next logical step.
Digitising paper receipts and invoices is a key step and IRIS can help in various ways. For those still reliant on paper receipts and invoices, we provide our bookkeeping platform Kashflow and Snap. For those using other bookkeeping software such as Kasfhlow, Xero, Quickbooks or FreeAgent we have IRIS Connector.
And as alluded to above, our new IRIS VAT Filer bridging software is now available. We’ve already seen massive demand for this.
If you have any questions surrounding the pilot and MTD in general, please contact us to see how we can help to get you set up.
The first step you can take as the agent on your MTD journey with HMRC is create your new Agents Services Account. This account is required to be able to act on behalf of your clients with regards to MTD and will be used for all new HMRC services going forward. The steps are simple, but there are quite a few elements so it is worth getting this done early. We have published an Agent’s Setup Guide to assist with this process. See it HERE.