Making Tax Digital (MTD) and Sage 200 Q&A
From April 2019, all businesses above the VAT threshold will be subject to major changes to VAT reporting. From this date, businesses will need to keep their VAT records digitally and provide their VAT return information to HMRC through Making Tax Digital (MTD) functionally compatible software.
When does Making Tax Digital (MTD) come into effect?
The Making Tax Digital (MTD) deadline is 1st April 2019, your Sage 200cloud software must be MTD ready by this date.
When will I have to file my first VAT, MTD filing?
Although MTD goes live in April, the first quarterly MTD for VAT filings are due from 1 July 2019. In the first year of mandatory reporting, HMRC has confirmed that it will take a soft penalty approach and importantly companies will be able use a ‘cut and paste’ approach during the one-year soft landing before companies need to use digital links.
Will my current version of Sage 200 be Making Tax Digital compatible?
No, ALL customers will have to upgrade their software to the latest Sage 200cloud release, this version was released in the Spring of 2018 to be HMRC-accredited. It is vital that customers running older versions of Sage 200 should contact us to discuss upgrading to this latest version.
What are the options available to businesses above and below the VAT threshold?
Above the VAT threshold: From 1st April 2019, all businesses in the UK (who are VAT-registered) with a turnover above the threshold will have to maintain their digital records and will need to send their VAT information to HMRC using third-party commercial software.
Below the VAT threshold: The HMRC online portal will remain available to all other businesses that complete a VAT return but have turnover below the VAT threshold. Businesses registered for VAT but with turnover below the VAT threshold will have the option to opt-in and file their VAT information via Making Tax Digital (MTD) should they wish to do so.
What are the requirements for the commercial software?
The commercial software must be able to:
- Keep digital records
- Be capable of reserving those digital records in a digital form
- Create VAT returns from those digital records
- Be able to provide HMRC with VAT data on a voluntary basis
- Be capable of receiving information from HMRC via the application programme interface (API) platform. This will allow HMRC to send ‘nudges’ to the business should it need to.