If your company has VAT sales above the £85,000 threshold, it will already be using MTD for VAT software. This was mandated in back in April 2019. It is the MTD for VAT software that will eventually become part of every business in the UK.
This software was pioneered by several teams of computer analysts, coders and programmers with a watchful eye and assistance from team members at HMRC. There were many important considerations to factor in: it had to be easy to use and merge effortlessly with the numerous programs businesses were using in the past.
Platforms such as the Microsoft Excel Spreadsheet, Quick Book, .CSV files, Xero software and the world-renown Sage product. Although companies are free to continue using these platforms to record its tax returns figures – the actual submissions to HMRC absolutely must be performed on MTD for VAT software.
This creates a digital link between HMRC and your own records. It turns all the VAT information into a digital format. This means it will be compatible and ready to go for MTD for VAT mandates. Cloud accounting software is highly recommended – especially for smaller businesses as this allows all the data to be accessed around the clock by pre-authorised personnel within the firm.
However, bridging software is only a part of the dynamic you will need to become MTD for VAT compatible.
To achieve this bridge between all the information on spreadsheets, Sage and various other tools, the project of migration requires “bridging software”. You see, MTD for VAT requirements asks companies to file VAT submissions to HMRC via a digital link. Using Microsoft Excel or any other .CSV file, Sage sheets, this action cannot be possible.
If you want to get the most effective VAT software then you have to be on board with something that is compliant. That is: submitting all the tax data digitally. MTD for VAT software has been tested over several months by teams from computer business and HMRC.
Why Has HMRC Introduced MTD for VAT?
Spreadsheets are great tools used in a multitude of tasks. But when it comes to the importance of tax returns, a spreadsheet will simply not do. Besides, HMRC was receiving a multitude of VAT returns in varying formats, which would add confusion and irrationality to any end-of-year project. Further changes are due in 2021 with digital tax returns.