When it comes to making tax digital for VAT, it is important that you have full clarification on how and when you need to apply. Here at Thomas Nock Martin, we are proud to be one of the leading West Midlands chartered accountants, and have plenty of experience and knowledge under our belts to help ensure your tax is filed in the right way and at the right time.
Making tax digital – A quick explanation
Making tax digital for VAT is a process where businesses with a VAT registration and a taxable turnover above the threshold, keep their tax and financial records in digital form. When it comes to filing their VAT returns, it is done online using specialised software.
Should my business make tax digital?
With most of the country having access to online applications, software, and storage, it is becoming increasingly common for businesses to keep their financial records and accounts in digital form. There are plenty of different places where this sort of information can be safely stored, such as in a software programme on a computer or a tablet, in an application on a smartphone or through a cloud-based storage system. Keeping your business records digitally can often be a safer and more reliable option and usually means that the information can be accessed much quicker when required.
Digital Tax Software
The software that you use when making your tax digital must be able to keep and maintain the required records that are specified in the HMRC regulations. It also needs to be capable of using the information that it stores to prepare VAT Returns for your business. Alongside this, the software needs to be able to communicate with HMRC’s digital Application Programming Interface platform. As long as the records are up to date, the software should be able to collate the records and create a VAT Return. You’ll then need to declare that the form is correct, before confirming to submit it to HMRC.
HMRC’s latest guidance on Digital Tax Returns confirms that some businesses may have automatic exemption. Your business will be exempt from MTDfV if your taxable turnover for the past year was less than £85,000. If you are already exempt from filing returns online, you will automatically be exempt from Making Tax Digital for VAT without needing to apply to HMRC. If you think you may be exempt for another reason, you need to prove to HMRC that using the approved software to keep your records or file VAT returns is not practicable. This could be down to reasons such as age, disability, location, or religion but they may consider other reasons too. If you are not sure about exemptions, it is important that you speak to experts for advice on the matter – as leading accountants in the West Midlands, we proudly offer small business tax support, including more information on MTD Exemptions.
Contact us today
If you are looking for professional accountancy advice, or would like to know more about Making Tax Digital, head to our website today. Alternatively, you can call 01384 261300 to speak to a member of our helpful and friendly team.
If you have found this blog helpful, you may wish to read our previous blog on the Tax Self-assessment Deadline.