The soft landing of Making Tax Digital for VAT starts from 1st of April 2019, or soon after if you submit quarterly returns.

With a few minor exceptions, if your taxable turnover is above the VAT registration threshold (currently £85,000), your business will have to follow the new rules set out by the HMRC. This is where it’s particularly important to have a good accountant who’s up to date with the new regulations and happy to pass this knowledge on to you as their client.

Why is it called a soft landing?

HMRC will allow a period of time for businesses to get ready and have in place digital links between all parts of their functional compatible software. After that period, HMRC will no longer accept “copy and paste” links of your digital records. You will have to use a software compatible with the API platform set up by the government.

In a nutshell, functional compatible software is a software program, or set of software programs, products or applications, that must be able to:

  • Record and preserve digital record
  • Provide to HMRC information and returns from data held in those digital records by using the API platform
  • Receive information from HMRC via the API platform

The cloud based softwares that we recommend to our clients are: Xero, Free Agent and of course QuickBooks. All of them are simple to use and HMRC-recognised VAT software providers.

Will I need to keep paper copies of invoices after going digital?

This depends. If you manually input the details into your chosen compatible software then yes, you will have to keep the paper original in your records. On the other hand, if your chosen compatible software allows you to scan the document and store it, then providing that it contains all the details required for VAT purposes, you will not need to keep the paper original. Unless you need it for other purposes where the original may be required.

We understand that Making Tax Digital means major changes for some of the businesses and we have worked with our clients to make this transition as smooth as possible. Our experienced team will be more than happy to help your business prepare too.

Telephone: 01752 895648 / Email: simonjilks@ivybridgeaccountants.co.uk