The Road to Making Tax Digital
Spring is often described as the season of new beginnings, so it seems appropriate that 1 April was the launch date for, arguably, the biggest change in the UK’s tax system for 20 years. VAT registered businesses above the VAT threshold would be required to start recording their business transactions using digitally compliant software from this date, under Making Tax Digital (MTD) for VAT. The software must be used to complete and submit VAT returns directly to HMRC, with the first mandated VAT returns being submitted early August.
Now that we have passed this date, we thought it would be interesting to look back to see how far we at GWA have come along this digital path. Although many of our clients may have only become aware of this change over the last couple of years, we started our journey around a decade ago.
10 Years in the Making
As a firm we are always trying to be forward thinking. Therefore, when cloud-based accounting software started to gain momentum about 10 years ago, we researched various market leaders to ensure we could advise clients appropriately. This led to GWA becoming a Xero partner in 2010 with a number of our team training to become Xero advisers.
In 2015 the government announced its vision to modernise the UK’s tax system through, amongst other things, the compulsory use of digital software. Following this, our tax technical team made MTD a recurring agenda point to ensure we kept up to date with any new developments. Following a delay, the government published six consultation documents in August 2016 covering a range of proposals. GWA prepared and delivered a response to these consultations prior to the November 2016 deadline.
Following this consultation, in 2017 the government proposed a timeline for implementation. Originally the regime was to be compulsory for Income Tax, VAT and Corporation Tax reporting on a staggered basis from April 2018. However, this was delayed due to a variety of factors, not least the pressure from the accountancy profession that the lack of detail in the proposals made it impossible to advise and support clients with the transition in the timeframe given. The timeline was amended to start in April 2019 for VAT return reporting, with other taxes not being made compulsory before April 2020.
Client Support Ensured
Within GWA, our bookkeeping and VAT team had grown in number and knowledge to ensure we could support clients with the change. The MTD team kept the partners and staff at GWA up to date with how the implementation of MTD was evolving and we talked to our clients about this at every opportunity.
Once firmer guidance from HMRC was made available in 2018 we really started to ramp up our communication to clients, through letters, emails and social media. In November 2018 we held our first of five client MTD seminars which took place in Alnmouth, Berwick and Haddington. These were extremely popular and provided clients with the opportunity to listen to and talk to software providers, partners and members of our team about how to prepare for MTD.
At the start of 2019 we submitted our first VAT return under the new regime and we are pleased to say that it went without a hitch. Since then, following new guidance issued by HMRC in February, we have been advising clients of the need to, and supporting them to sign up for MTD with HMRC through the www.gov.uk site.
It has been, and continues to be, a very busy time at GWA as we assist clients through this change to our tax system. Under current government plans, MTD will be rolled out to all taxes over the next few years, so we don’t envisage any let-up. However, we firmly believe that our proactive approach ensures that we continue to provide our clients with quality advice and quality service.
If you would like any further information or support with Making Tax Digital please do not hesitate to get in touch with us.