Making Tax Digital Monday and Brexit Friday

This financial year will be long remembered. Every company that has a turnover of £85000 or more will need to digitally return their VAT returns as of April this year. Companies over the VAT threshold (with a few exceptions for those with complex needs) will be required to use the Making Tax Digital (MTD) service to keep records digitally and use MTD compatible software to submit VAT returns from 1st April 2019. It hasn’t been lost on many people this is the next working day after Brexit. We get the weekend to stew over Brexit (Friday) and then see how our tax works digitally (Monday) and then sort out the end of the financial year (the following Friday). I for one cannot wait…

Although the overwhelming majority of VAT registered businesses file their VAT returns digitally MTD will bring significant changes to their present processes. All transactions will require an audit trial, records will have to be kept electronically, new software will have to implemented and VAT will have to be returned digitally. There’s a lot to do.

Research undertake by KPMG illustrates that most businesses (64%) believe making tax digital is a good idea but feel they are unprepared for MTD.

This will open up new problems, particularly around flexibility and fluidity of the new and existing systems to meet additional obligations of MTD.

Although in the long run the cost will be mitigated MTD is likely to end up costing businesses time, money and morale in the short term. Coming just after the deadline for Brexit E-Invoicing service providers should be ready to support those unprepared and to capitalise on the uncertainty. Furthermore, MTD and the E-Invoicing movement should be highlighting how electronic invoicing (of which MTD is a part) can help buffer the impact of Brexit by saving money, time and morale in the long term. It is just perhaps bad timing that MTD comes the Monday after Brexit Friday, or indeed a bonus, depending on your point of view. If we care about the E-Invoicing movement we can make this transition as smooth as possible and we should be screaming the benefits of MTD from the rooftops.