Disclaimer: It remains the responsibility of your business to prepare itself for Making Tax Digital and to seek advice via your accountant. This article is intended as a general guide only.
Last updated: 11th March 2019
Who Should Read This?
This article is for VAT registered businesses exceeding the threshold (currently £85,000).
What Do I Need To Know In General?
Making Tax Digital (MTD) is an HMRC initiative that will revolutionise the UK tax system through the implementation of a fully digitalised tax system by 2020. Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT Returns using compatible software.
Sage has also produced a useful Q&A on MTD.
|Please note: Your main port of call to handle general questions about Making Tax Digital will be your accountant.|
How Does Digital Record Keeping Affect Me?
All VAT registered businesses must keep and preserve certain records and accounts as part of Making Tax Digital. Normally, this will be invoices and payments stored in a compatible accounting system such as the Sage50 family or Xero accounts which can also submit VAT returns digitally. Please note that REC+ is not itself a compatible accounting system, it is an online ordering system.
When Does This Come Into Effect?
1st April 2019* for most businesses / 1st April 2020 for feeding in data via digital links
1st October 2019* for deferred businesses/organisations or those with exemptions / 1st October 2020 for feeding in data via digital links
Is My Business Deferred?
Probably not. The 6-month deferral applies if you fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.
Is my Business Exempted?
Only if HMRC is satisfied that:
- your business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers)
- it is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reasons of age, disability, remoteness of location or for any other reason
- you are subject to an insolvency procedure
What Is Meant By 'Digital Links'?
If you are taking online orders then you will need to feed this data into your compatible accounting software via an API or file upload such as CSV format rather than manually or using a copy and paste method.
How This Affects Online Retailers Using REC+ Ecommerce
From 1st April or 1st October 2020, if you are an online retailer you will need to feed your order data from your website into a compatible accounting system such as the Sage 50 family, Xero accounts, Quickbooks etc.
There are a number of solutions available for this either now and a new REC+ export program will be made available before the 202 deadlines:
- Integrate into the Sage50 family and Xero via Tradebox in real-time.
This functionality is already available using an API which transfers data into Tradebox, with whom you need to buy a subscription. Tradebox then updates the accounts packages. Read how to set up Tradebox for use with REC+.
- Link your Sage Pay and Paypal accounts to Sage 50.
It has been possible since April 2016 to integrate with Sage50 Invoicing via Sagepay, their payment processor. This will be a simple way to integrate into their accounts package if you are only taking payments via SagePay. Read more on Sage's website and also how to link Paypal to Sage.
- Link your Paypal account to Quickbooks or Kashflow
This is especially useful for ecommerce sites who only take payments via Paypal. It also handles accounting entries for Paypal fees. Requires a subscription to Quickbooks and the required add-on. Visit Quickbooks or Kashflow directly for advice and prices
- Export order data from REC+.
A new program will be made available in REC+ to export your order data in CSV format and this can then be uploaded into your accounting system via it's data mapping service or given to your accountant to import. Available in 2020.
How This Affects Other REC+ Sites Taking Bookings / Payments Via Forms
If you have any custom forms on your site which take orders/payments then you should maintain this data in your form in case it is required as a digital record. You can also export this data into a CSV file which could be imported into your MTD compatible accounting system via whatever data import mechanism they provide or by giving it to your accountant to import it for you.
Writing API's For Your Accounting System
We can quote to write an API to connect to your accounting system upon request. Prices start from £1,450+VAT.