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MTD: What you should know

22nd Aug 2018
Brought to you by
SAP

SAP® Concur® is the world’s leading brand for travel, expense and invoice management solutions.

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Have you found this content useful? Use the button above to save it to your profile.

The Making Tax Digital (MTD) legislation comes into effect on 1 April 2019, and yet, a recent Accountancy Age webinar on MTD revealed that 68% of businesses were either only slightly prepared or not at all prepared for the change.

Context

MTD was designed to ‘make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.’ At the moment, HMRC estimates it’s missing £9.4 billion in tax revenues due to errors and ‘failure to take reasonable care’ in submissions. By digitising returns via MTD, it hopes to close this element of the tax gap.

But what does this mean for you? To start with, if your expenses and invoices are still paper-based, and you use Excel spreadsheets, things are about to change.

What are the requirements for MTD?

On 1 April 2019, MTD will come into effect for businesses with a turnover above the VAT threshold (currently £85,000). With a few exceptions, it will apply to unincorporated businesses, companies, LLPs and charities.

These businesses will need to:

  • Keep their records digitally
  • Provide their VAT return information to HMRC through MTD compatible software

Businesses will need to submit:

  • Business name, principle place of business and VAT registration number
  • The VAT account that each VAT registered business must keep, by law

All data and evidence in relation to company spend (receipts, invoices, etc) need to be captured digitally and submitted to HMRC using compatible software. You can find more information on the government website.

Opportunities and challenges

When you start to implement the new systems necessary for MTD, you will not only gain the ability to comply, but your finance processes will also be positively transformed.

However, those businesses that are still working with paper-based processes will need to face some challenges. MTD is going to involve a step change in ways of working and culture shifts will be needed, which is why starting sooner rather than later is important.

Next steps

If you’re already partnering with suppliers such as SAP Concur, MTD will be an easy process. If you need to make changes to meet the requirements of the legislation, start making the necessary changes and harness what technology has to offer.

For more information, call us on 01628 645 100 or visit concur.co.uk