HMRC say the driver behind making tax digital (MTD) is to reduce human errors which may be introduced into the accounting records by retyping, or cutting and pasting figures. MTD should force businesses to maintain an end to end digital accounting system.

There are three broad barriers to implementing MTD:

  1. digital exclusion of taxpayers
  2. availability of suitable software
  3. cost of purchasing and implementing MTD-compliant software

All businesses should currently submit their VAT returns online. However, where the business owner can’t use the online portal he can claim an exemption and make arrangements with HMRC to submit the VAT returns by telephone, or appoint a tax agent to submit the returns. HMRC has stated that those businesses who are currently exempt from online filing of VAT returns, will automatically be exempt from MTD and won’t have to claim that exemption again.

If you require someone else to submit  VAT returns for you as you can’t deal with computers or access the internet, it will be difficult to seamlessly move to MTD. The business needs to register for MTD through its online business tax account (BTA). If you haven’t already accessed your BTA we can help you to do this.

If the BTA is beyond your current capabilities, that business needs to claim an exemption from MTD, by ringing the VAT helpline. We expect HMRC to set up a different mechanism to accept applications for exemptions from MTD in 2019.

Solutions to the software barriers to MTD are beginning to emerge, as bridging software (from spreadsheets to API -enabled software) is being offered at low or minimal cost. We have listed below three of the bridging software products with links that we are aware of, and the link to HMRC’s list of MTD software providers. We can assist you in analysing your requirements and identifying suitable solutions.

Those businesses that have moved to cloud based software can be ready for MTD filing almost immediately. If you wish to move to the cloud (or have consdiered it) we can help you in choosing a suitable platform and any allied solutions necessary and help in the setup and configuration. Contact us via our contact form or telephone 01384 468320 to discuss your particular needs and how we can help.

Absolute VAT Filer   (Absolute Tax)

Avalara MTD Filer    (Avalara)

BTC Software

A list of suppliers intending to support vat MTD can be found here on HMRC’s website

Information regarding number of cloud software solutions that we offer can be found on our Solutions page