Are you ready to Make Tax Digital…..do you need to be?

Yes-tax-return-feat-imgWhat is Making Tax Digital (MTD)?

MTD is being introduced by HMRC as part of the government’s plan to transform the tax system and make it easier for individuals and businesses to get their tax right first time and assist them with keeping better records.

See the HMRC website’s for further information: https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

Who is affected?

Initially, from 1st April 2019, businesses that are VAT registered and have a turnover above the VAT threshold of £85,000 will have to keep their VAT records digitally and automatically submit their VAT returns to the HMRC through an “MTD compatible software’. We are pleased to confirm that MyCake is MTD compatible.

For those businesses that are under the threshold, you can still register but it is not compulsory at this time, however, once you have registered you cannot change your mind!

If you are still unsure whether you need to register then please check using the link below:

https://www.gov.uk/government/collections/making-tax-digital-for-vat

What are the pros/cons?

If you are VAT registered then you already need to report to the HMRC and pay your quarterly VAT bills so the main change is that your records now need to be stored digitally and sent to the HMRC. There isn’t a huge difference apart from the way you record your data. Doing things digitally can make you more efficient, minimise your paperwork and the majority of your admin will be done automatically.

Most of us don’t like change and it may seem overwhelming when you first think about changes you need to make but MyCake can assist to ensure this process runs as smoothly as possible for you.

How do you register?

You need to register with HMRC you can do that via the link below:

https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat

You will be asked the following questions:

Do you have accounting software for managing your VAT records?

Because you are using MyCake (who in turn partner with Kashflow), you can answer “Yes, I have accounting software”

Is your software ready to submit your Making Tax Digital for VAT Returns directly to HMRC?

Again, answer “Yes, my software submits through Making Tax Digital for VAT”

You are then asked to sign in using your Government Gateway ID and sign up process. Once completed, you must wait for confirmation from HMRC, via email, before completing the next stage. This may take up to 72 hours and failure to wait may mean you experience set up issues.

Once the process has been completed, you need to connect your MyCake account to HMRC using your Government Gateway User ID and password.

To do this log into your MyCake Account, navigate to Taxes>VAT>Connect to HMRC and follow the on screen instructions. Remember to reset “my annual turnover is above £85,000” to YES before you do this.

What else is in the pipeline?

MTD for income tax and corporation tax is currently expected in April 2020, however, this will not be introduced until MTD for VAT has successfully rolled out.

For further information, please visit https://www.kashflow.com/making-tax-digital/ for further information on how MyCake systems can help you.

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