Making Tax Digital changes how affected businesses and individuals maintain records and send information to HMRC. It involves both digital record keeping and compatible software.
Start by checking which tax and which activities are involved. VAT and Income Tax have different requirements.
Digital records and links
Relevant transaction information needs to be kept in a digital form. Where several systems are used, the required connections between them must be digital.
A spreadsheet can form part of an arrangement, but the complete process must meet the rules. Bridging software can connect records to HMRC; it is not a substitute for checking how information moves through the system.
VAT
MTD for VAT applies to VAT-registered businesses unless an exemption applies. It is not restricted to businesses above the compulsory registration threshold.
Review the official MTD for VAT guidance for record requirements and exemptions. Difficulty using digital tools may need an application to HMRC rather than simply continuing with an old process.
Income Tax
Sole traders and landlords should check whether their qualifying income brings them into MTD for Income Tax and when they must start.
Use the current eligibility and commencement guidance. Do not use a past announcement as the timetable for your own business.
Prepare the working process
Agree who records transactions, checks them and submits information. Establish how adjustments and year-end work will be handled.
Our cloud accounting service explains the bookkeeping support available through Jackson-Scott. We can review the complete process against the obligations that apply to you.