There have been no blueprints for CFOs navigating through the last 12 months. We have seen their roles evolve from ‘score keepers’ to business leaders responsible for company continuity and survival throughout the COVID-19 pandemic.
With Making Tax Digital (MTD), Brexit and ever-changing updates from HMRC, the burden of keeping on top of legislation and compliance for medium and large businesses can cause headaches for CFOs and finance teams.
To help you get MTD-ready we’ve created a no-frills guide so you can prepare for complete control of digital processes and step back from relying on one spreadsheet for VAT submissions.
WHAT IS MTD?
MTD is a mandatory Government initiative which began on 1 April 2019. It sets out to make it easier for companies to digitally submit their VAT returns right first time to minimise costly errors.
Ultimately, HMRC wants to revolutionise the UK tax system with the objective of becoming one of the most digitally advanced tax administrations in the world.
Prior to MTD, the government had lost out on billions of pounds throughout the years due to unpaid taxes and submission errors.
For CFOs this is an important next step to get rid of outdated and manual processes and replace them with digital processes to help their teams become more efficient.
DEADLINE DATES FOR MTD
1 April 2021 – Now live
HMRC’s MTD ‘soft landing period’ on digital links has ended. This means that you will no longer be able to copy and paste information between products or spreadsheets and the information must be digitally connected in order for you to submit your VAT return.
8 April 2021 – Now live
HMRC will withdraw the XML VAT submission channel. This will affect you if you are a voluntary VAT filer not yet registered for MTD and you currently submit VAT returns through software.
1 April 2022
MTD for VAT will apply to all VAT-registered businesses, so those classed as voluntary with a taxable turnover below the VAT threshold of £85,000 will need to ensure they are MTD-ready.
6 April 2023
MTD for income tax will be introduced in 2023.
IS MTD COMPULSORY?
For VAT-registered businesses with a taxable turnover above £85,000, the short answer is yes. The soft landing period for MTD is now over, and businesses need to ensure they are compliant before the deadline dates set out by the government.
CFOs need to make sure their business is MTD compliant within deadline dates otherwise they could face significant financial penalties. The penalty system is cumulative, and failure to comply could result in fines enforced within 15 days of overdue tax payments.
A useful Government overview of Making Tax Digital is available online to keep you up to date as your business migrates to the new regulations.
PREPARING FOR DIGITAL TAX SUBMISSION
Although the government hasn’t provided free software to support this initiative, all businesses will be given a unique digital account so tax submissions can be made more frequently and monitored on an ongoing basis.
Moving forward, all businesses are responsible for sourcing the right digital solution to support MTD submission processes. For medium to large businesses this will require CFOs to invest significant time to review, trial, prepare and implement new digital software for their Finance Teams.
In 2020, organisations began to introduce cloud-based accounting software, such as our Cloud Financials, to efficiently manage financial processes while working from home during the pandemic. For these CFOs, bridging the gap with a MTD software extension may be the ideal solution.
We have also seen many organisations rushing to adopt free software which still relies heavily on Excel and human intervention, which goes against the philosophy of reducing errors by using a digital link. Although this may seem like a ‘quick fix’ solution, these types of software do not meet the requirements of MTD.
Businesses need to use software that complies with HMRC systems. The software should:
- Keep and maintain digital records according to MTD regulations
- Digitally send VAT returns containing/alongside information held within the software
- Provide VAT data to HMRC where necessary
- Access information sent by HMRC via an API platform
HOW CAN ADVANCED HELP ME GET MTD-READY?
We have been recognised by HMRC as a supplier supporting MTD for VAT through the delivery of our Business Tax Portal.
We are here to support medium and large businesses through digital transformations to ensure new processes are simplified, efficient and more accurate.
WHAT ARE THE BENEFITS OF BUSINESS TAX PORTAL?
MTD submission as easy as ABC
Business Tax Portal makes the digital journey seamless and ensures your VAT return is compliant.
One of only six HMRC-recommended providers
The market is saturated with hundreds of solutions, but we are one of just six who are recommended by HMRC.
There’s no room for error
Make required adjustments and submit directly into HMRC’s portal without Excel manipulation.
Gain a complete end-to-end audit trail
Business Tax Portal connects to all our Advanced solutions – making the trail from FMS to Adjustment Software and onto HMRC seamless and completely auditable.
Traceability over any adjustments to your VAT return
A complete view of any adjustments made and a true end-to-end digital link process.
Ready for the future
Business Tax Portal has a roadmap for the future so all the developments which come later down the line with the MTD initiative are covered.
WANT TO FIND OUT MORE?
Knowledge is power and getting up to speed with the right Making Tax Digital software solution for your business should be no exception.