HMRC’s vision to digitise the UK tax system kicked off in April 2019 and the process began with the launch of Making Tax Digital (MTD) for VAT, which applied to all businesses with turnover above the VAT threshold, which is currently £85,000 per annum.
All VAT registered businesses with a taxable turnover of more than £85,000 must sign up to MTD and keep records digitally. To keep digital records, your business needs to use a compatible software that will connect to HMRC.
If your business uses more than one compatible software to keep digital records and submit the VAT returns, they will need to be linked. The digital links must be in place for all VAT quarters beginning on or after 1 April 2021.
From 1 April 2022 all VAT registered businesses will need to sign up to MTD, regardless of their threshold.
Please get in touch with us to receive help with signing up to MTD and discuss compatible software packages, but the easy answer for most small businesses is to use Xero, Sage or Quickbooks.