You may have heard of some big changes coming to the current UK tax system, that will soon affect VAT registered business with a taxable turnover above the current VAT threshold (£85,000).
Making Tax Digital (MTD) is all part of the government’s plans to become one of the world’s most digitally advanced taxation systems, and make tax administration more efficient and easier for business owners. A digitised process should help to eliminate errors and make it quicker for businesses to submit tax returns.
Ultimately, it’s positive change that we can look forward to, but we appreciate you may have some burning questions before MTD comes into force on 1st April 2019.
What does Making Tax Digital (MTD) mean for me?
There are 2 key things that businesses will need to do:
- keep digital records for all VAT transactions
- use MTD-compatible accountancy software to submit VAT returns to HMRC
We’d recommend reading the HMRC’s guide about compatible software or programs, however, in essence, ‘compatible’ software is a program, or set of programs, products or applications, which must be able to:
- Record and preserve digital records
- Use the API platform to provide information and returns from data held in your digital records
- Receive information from HMRC via the API platform
Some software products or applications may be able to do one or 2 of the above, and others will be able to do all 3 for you.
With MTD, you won’t necessarily have to use an accountancy software package, but it will be the easiest option in the long run, and the use of technology will be compulsory.
What are the timings for MTD?
A modern epos system is essential for MTD and the good news is that, as an XPOS user, you’re already keeping your sales records in an electronic system. So, you’re halfway there.
However, from April 2020, you’ll no longer be allowed to pass manual/paper information to your accountant and XPOS will need to be linked, digitally, to MTD-compatible accountancy software.
Thankfully, not everything has to be done by April 2019, and MTD can be broken down into 2 stages:
From 1 April 2019
Store sales records digitally ✔
VAT Returns submitted digitally to HMRC
From 1 April 2020
XPOS must be linked to compatible software
and tax data must be transferred digitally
For the next 12 months, the onus is on whoever does your accounts, but the sooner your business is prepared for MTD, the better, and it’s a good idea to assess your software options now.
XPOS and XERO
Xero is a great online accounting provider that’s fully MTD-compatible, and ticks all the boxes when it comes to getting your business ready for digitised tax.
If you’re already a Xero customer, you’ll soon see an option within Xero, to start moving to MTD for VAT.
We’re working closely with the team at Xero to give you a seamless interface between XPOS and Xero by the MTD start date. Once the XPOS interface is open, you’ll be able to export 100% of sales data.
If you’d like to link with Xero, please email email@example.com, or give us a call on 01454 418 395 (option 2).
XPOS and MTD
Depending on how you use XPOS, it may be that only sales data is in your epos system: so, you might need to manually add sales from the club, swing room, lessons, wages and possibly, retainers, to your accounting software.
Act now to get business ready
If MTD applies to your business, go to www.gov.uk, search for ‘MTD Action’.
Over 150 software providers, (such as Xero, Sage and Quickbooks), have been working with HMRC to ensure their accountancy products are compatible with MTD, and, if you’re already signed up to one of those, you’re in a good place. However, you might want to talk to your accountant, or book keeper, to check that your software is okay for MTD. The current list is here.
Talk to Us
Rest assured, we’ll do what we can to make sure all our customers are MTD compliant. We’re working with Xero, and other popular software providers now, to provide a working interface between XPOS, but there’ll also be a more basic, generic solution, (such as a csv export), should you, or your accountant, need it.
Talk to us. Let us know what MTD compatible accounting package you plan to use, and we’ll make sure your business is ready for the new changes.
We’re here to help.