Regulatory requirement of Making tax digital.

Be In Compliance With The Regulatory Requirement of MTD!

Making Tax Digital (MTD) is the UK’s tax initiative that will revolutionize the whole system by making tax digital for individuals, agents, and businesses.

MTD promises a fully digital tax system by 2019, so companies have to get ready with a reliable solution until then. According to HMRC, MTD will obligate each responsible party to establish a digital tax account.

Digital tax accounts of taxpayers will bring all of their details in one place. These digital tax accounts will be the main tool to manage tax-related affairs in the upcoming digital tax era.

What is the Legal Requirement of MTD for VAT?

MTD for VAT is the main component regarding the initiative because of the sole significance of VAT income for the government.

If you have a VAT threshold above £85,000 and if you’re not one of those that has been deferred, congrats!! You have to keep your records digitally.

The legal requirements for MTD for VAT is essentially straightforward.

  • To keep it simple, businesses must file VAT returns with a Making Tax Digital software and their records must be in a digitally readable form.

Why MTD is Important for Your Business?

Tax is going digital and a huge number of companies based in the UK will have to change their way of submitting VAT. There is a simple explanation behind the situation, MTD is a mandatory process led by HMRC and your business must be prepared to avoid adversity.

Benefits of Complying with MTD for VAT

Making Tax Digital initiative is not a new tax system that will impact businesses in a harmful way. In fact, MTD will create a better and safer digital tax environment for businesses.

A visionary business should be able to notice the advantages that come complying with MTD for VAT.

Businesses with  MTD compatible software will enjoy the following benefits;

Time-Saving

MTD points the necessity of electronic documentation systems in a forward-looking manner. A variety of businesses that still use manual methods all over the world are basically losing time.

Companies with digital accounting software can save up to 30 days in a year. Think about what could be achieved with an additional month!

Efficiency-Saving

Companies that successfully integrated the new digital tax era will spend less money in comparison to manual documentation. Also, at a senior level, it would be much easier to manage employees that use a digital tax accounting software thanks to its traceability and ease of use.

Tax in Real-Time

There is nothing better than follow what is going on in real-time!

Prevention of Errors & Late Filing

MTD’s aim is to eradicate errors by keeping everything in digital. A Making Tax Digital compatible software will keep companies on top of their tax liabilities and will alert them before the payment is due in order to prevent errors or late payments.

What Records You Have to Keep for MTD?

Under MTD, businesses will be required to keep certain digital records which are listed below:

Designatory Data

  • Business name.
  • Address of the principal place of business.
  • VAT registration number.
  • A record of any VAT schemes used (such as the flat rate scheme).

Supplies Made

For each supply made:

  • Date of the supply.
  • Value of the supply.
  • Rate of VAT charged.

Supplies Received

For each supply received:

  • The date of supply.
  • The value of the supply, including any VAT that cannot be reclaimed.
  • The amount of input VAT to be reclaimed.

Your Summary Data

  • The output tax due on sales.
  • The output tax due to acquisitions from other EU member states.
  • The tax payable on behalf of your supplier under a reverse charge procedure.
  • The tax that needs to be paid following a correction or error adjustment.
  • The input tax claimable from business purchases.
  • The input tax allowable on acquisitions from other EU member states.
  • The tax reclaimable following a correction or error adjustment.
  • Any other necessary adjustment required by VAT rules.

Penalties For Not Complying with MTD

Making Tax Digital is an enforced initiative and has consequences for not complying. Penalty regulations differ greatly case to case but they often have a minimum and maximum monetary limit determined by day count.

Foriba SAP MTD Cockpit Landscape

Foriba SAP MTD Cockpit offers a comprehensive yet easy way to keep your tax liabilities in check.

As it is mentioned in its name, Foriba SAP MTD Cockpit runs within SAP. As a cockpit, it extracts the needed data and transform it to required documentation and submit it to HMRC for yourself with no human touch.

As an end-to-end solution, it automates your process and does everything for you.

It automatically creates XML format as HMRC required and submits it. You can click on the create & submit button and between these buttons, all you need to do is, glimpse over it, check it out, and that’s it!

Obviously, it’s a practical, compact, end-to-end solution!

What Does An End-to-End Solution Mean?

It starts and ends within the process. In all steps, all you need to do is clicking into the two buttons. Also, it includes digital linking! Which means, if you go back and check some invoices that not be declined, you can recheck the history to change the data.

For example, there was a 60-pound payment which you’ve cleared it and adjusted it automatically. So, if you make some changes, it automatically comes and affects the final document.

Do You Need More Help? 

I’ve tried to summarize the whole process but honestly, there are experts who will tell you the whole story better! So, go on and get in touch with our Business Development Representative for further information!

She will be happy to answer all of your questions and direct you to the proper person based on your needings!

For further reading, check them out;

The ROI of B2B e-Invoicing Automation

Why Your Business Needs True e-Invoicing Strategy?

Why You Need a Long-Term e-Invoicing Strategy for your SAP System

 

Thank you for your time!

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