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MAKING TAX DIGITAL

The Making Tax Digital solution for your business

Submit VAT returns with confidence through our trusted, fully compliant, HMRC-approved KashFlow software.

What is Making Tax Digital?

Since April 2019, businesses registered for VAT above the threshold of £85,000 have had to start keeping digital records and submit digital VAT returns to HMRC. The aim of the new digital tax system is to make tax administration more effective and efficient, while also simplifying it for individuals and businesses so they can easily get their tax right and keep on top of their affairs.

The next MTD submission deadline:

November 7th, 2019

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What does it mean for my business?

Under Making Tax Digital, businesses (including sole traders) have to send quarterly updates to HMRC with their income and expenditure. This has to be done through online accounting software. HMRC will be able to access this digitally stored information. 

The software you choose must use application programme interfaces (APIs) for returns to be filed to ensure it is MTD-compliant. HMRC has approved KashFlow as MTD compliant software. 

This means that any offline or desktop-based accounting software that cannot communicate with HMRC will render your business non-MTD compliant and risk your business being hit with  penalties and fines. 

How this will benefit my business

Get your tax right

KashFlow streamlines your tax administration thanks to a combination of near to real-time information, individual digital tax accounts and more regular updates. With all your numbers in one place, it’s easier for you to get your tax right.

No more manual data errors

Under MTD, all your numbers will be in one place and up to date for you to better manage your business, while tax recording will be more accurate. Online accounting software cuts down the chances of errors and miscalculations, and it’s easier to spot and amend mistakes as you go.

Better budgeting and cashflow

There’s no need any more to wait until the end of the tax year to find out how much tax you have to pay, bringing the benefits of improved budgeting and cash flow.

The HMRC
step by step guide

The ultimate guide
to VAT

See how KashFlow can help you with a free trial

Making Tax Digital – The Small Business Guide

Complete with key dates and up-to-date legislation, this is an essential free guide to understanding MTD:

  • What Making Tax Digital (MTD) is
  • When it comes into effect
  • How it is going to impact your business

MTD doesn’t mean more work… 

Many small business think that Making Tax Digital will result in them spending much more time on their bookkeeping and updating HMRC. 

But with accounting software, you’ll enter your numbers as you go. This means that, when it gets to your quarterly updates, everything is already in place and virtually ready to send off.

You will also save time by:

  • Making adjustments to mid-year and end-of-year accounts and stay up to date, so you don’t have to re-do your work.
  • Reducing the time spent searching through files by keeping your books structured, simple and in one place.
  • Linking directly to HMRC, meaning your data goes straight to right place every time.
  • Providing information on request, or sorting through your files whenever you need to check anything.

Making Tax Digital FAQ’s

Making Tax Digital for VAT is a new tax initiative that means UK businesses must submit digital updates to HMRC via MTD compliant software, such as KashFlow.

Every small business owner and individual taxpayer now has access to a digital account that they can use to check their records and manage their details with HMRC. Your account gives you a complete view of your business’s taxes and you can sort everything at the same time and place. 

If you’re a VAT registered business with a turnover above the VAT threshold (£85,000), then MTD has applied to you since 1 April 2019. Whether you’re an unincorporated business, a company, a limited liability partnership or a charity – you have been required to keep digital records and submit digital VAT returns from your first VAT return period on or after 1 April 2019. If you’re registered for VAT but your turnover is below the VAT threshold, then you have had the choice to opt in from 1 April 2019 to file your VAT information digitally. Visit HMRC’s dedicated Making Tax Digital guidance page to find out more.

This means you’re required to keep digital VAT records, register for Making Tax Digital with HMRC, and submit VAT returns through an MTD compliant software (such as KashFlow). KashFlow is listed on the HMRC website as MTD for VAT compatible software which is available now.

Users who already submit their VAT returns electronically to HMRC using the online filing feature in KashFlow have been required to sign up to MTD via the HMRC website and submit through MTD from 1 April 2019.  

This depends on if your business meets the criteria set out  by HMRC. 

Businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 1 April 2019. 

Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily. 

Some businesses are also excluded from the initial phase. HMRC have announced a deferral date for certain businesses. Check if you meet this criteria HERE. For these businesses, you must be MTD compliant from your first VAT Return period starting on or after 1st October 2019.  

  1. Sign up to MTD for VAT. Please note, once you complete the sign-up process you must wait for confirmation via email from HMRC before completing the next step, which may take up to 72 hours. Failure to do so may result in set up issues. 
  2. Connect your KashFlow account to HMRC using your government gateway user ID and password. To do this log in to your KashFlow account, navigate to Taxes > VAT > Connect to HMRC and follow the on screen instructions. 
  3. Manage and submit your VAT returns by navigating to Taxes > VAT 

HMRC have announced a deferral date for businesses who meet certain criteria which you can check here. If you meet the criteria this will mean you must be MTD compliant from your first VAT Return period starting on or after 1st October 2019.  

It’s up to you. If your business has a taxable turnover below the VAT threshold you can still sign up for MTD voluntarily if you wish. 

No, it’s simple and only requires a few clicks. However, the process for signing up for MTD through HMRC’s portal can take up to 72 hours. 

HMRC has said that it will not impose penalties straight away. The organisation is taking a light approach and will not issue penalties where businesses are doing their best to comply with the new rules. 

  1. Create an Agent Services Account if you do not have one already 
  2. Link your clients to your Agent Services Account via MTD. 
  3. Sign up each of your clients to MTD for VAT. Please note, once you complete the sign up process you must wait for confirmation via email from HMRC before completing the next step, which may take up to 72 hours. Failure to do so may result in set up issues. 
  4. Connect your KashFlow Connect account to HMRC using the government gateway user ID and password issued when you created your Agent Services Account. To do this log in to your KashFlow Connect account, navigate to Settings > Connect to HMRC and follow the on screen instructions. 
  5. Log in to your clients KashFlow account to manage and submit their VAT returns by navigating to Taxes > VAT.   You will need to enable the client to submit via MTD by going to Settings> VAT Settings and set the option for “I have signed-up for MTD” as “Yes”. 

Our MTD Setup Guide for Agents will help guide you through steps 1 to 3 which must be completed on the HMRC website. You may also wish to refer to this HMRC step by step guide. 

No, businesses will still be submitting the same data to HMRC as before, but the mechanism for the submission is changing. This is all taken care of in KashFlow.  

How KashFlow can help

KashFlow’s online accounting software is the ideal solution to make sure that you are fully compliant with HMRC. 

Find out more how KashFlow can benefit your small business.

See how KashFlow works with your business and your books