Making Tax Digital appears to be on track for its formal launch in April 2019. The first phase will see companies submit VAT returns monthly through their accounting software. QuickBooks is one of 33 companies that are part of the closed beta trial. QuickBooks has been quick to announce the success of its first transmission.
Does it apply to my business?
The first phase affects companies who are VAT registered with an income over £85,000. From April 2019, they will need to keep a digital record of all VAT transactions. Companies will also be expected to submit VAT returns using MTD compliant software.
Software vendors such as Intuit QuickBooks, Sage and Xero are all vying to deliver solutions as quickly as possible to the market. Sage sees this as a lever it can use to help persuade companies to move to its cloud software according to Steve Hare, Group Chief Financial Officer.
This just the first phase in what is a significant project that puts HRMC at the forefront of tax digitalisation. The project is due to reach open beta in Autumn.
In April 2019 the first tranche of companies will submit VAT returns automatically. A year later, companies with income between £10,000 and £85,000 will follow suit. For those companies not yet on a cloud accounting solution it is a transition that they will need to consider.
Dominic Allon, Vice President and Managing Director of Intuit Europe commented: “There has been a lot of talk about Making Tax Digital, but with the official roll-out fast approaching it’s crucial that we offer a simple, fast solution to help accountants file their taxes digitally. We’ve been working closely with HMRC, taking part in workshops, insight sharing sessions and hackathons to ensure the product is developed in line with the VAT requirements set by HMRC, and to make life easier for our customers.”
What does this mean
This automation of tax returns is something that governments around the world are watching with interest. The UK government is not the only one leading the charge. In Australia Single Touch Payroll has already rolled out.
For UK accountants, it is another level of automation that is seeing the industry mature from dealing just with numbers and moving towards business advice.
Helen Furniss, Senior Manager, Sagars commented: “Sagars is excited to be part of such a landmark moment. We have known for some time that Making Tax Digital will have a deep and long-term impact on the accountancy sector and to have a front row seat alongside our partners at QuickBooks is amazing.”
Intuit QuickBooks, Xero and Sage are not the only vendors working with HMRC. Over 150 companies are working towards providing compliant software. More than 40 will be ready during the first phase of the project. The HMRC site currently lists 33 vendors. If the vendor you use isn’t listed it is worth asking when will the software will be ready. For those using on-premises software this may also entail an upgrade, something that needs planning.
For HMRC, this part of the project appears well on track. The difficulty may be ensuring that the end users of the software are actually able to transfer the files.