Making Tax Digital: Your six-step checklist

Not sure whether your business needs to be VAT-registered? If your total VAT taxable turnover for the last 12 months is above £90,000 (the VAT threshold), or you expect your turnover to go over £90,000 in the next 30 days, you must be VAT registered. All VAT registered businesses must submit their returns digitally via software. More information on VAT registration is available here.

For MTD, you need the right tools for keeping your financial records in digital format, so it’s important to make sure your accounting software is compatible with MTD for VAT. To check your current software is compatible, speak to your accounting software provider, or check the list of compatible software here.

If you’re considering accounting software, you can access special Zempler Bank Marketplace offers with Sage Accounting and KashFlow accountancy software in add-ons in Online Banking or the Zempler Bank app.

If you would prefer to continue using spreadsheets to keep records and have decided against moving fully over to an accounting software package, you can use ‘bridging software’ instead. This is a tool that connects with HMRC’s systems for Making Tax Digital, whilst not requiring you to abandon your spreadsheet records. It extracts transactional data from your spreadsheet records and files it digitally to HMRC in a compatible format.

If you have a Zempler business account or business credit card, you can now file your VAT returns through Online Banking with our MTD-approved VAT Returns tool. Learn more here. You can also find a list of bridging software here.

It’s important to know when your next VAT return is due. If you’re not sure, check the HMRC website or contact your accountant if they do your MTD returns on your behalf.

Take a moment to think about how you currently manage your VAT returns as some of these processes will need to be digitalised. If you’re buying new software, make sure you and other staff members know how to use it.

Any issues will need to be ironed out before your first return is due. It can also help to make payments digitally where possible, via bank transfer, or using your card, as opposed to cash.

By doing this, it will be much easier to audit any statements or provide evidence for any purchases. The switch from manual processes to a more streamlined and digital way of doing your VAT returns will help you keep a better audit trail and make your tax processes easier and more effective.

Is your accountant managing your VAT Returns? They can continue to do this even after you (or they) sign up your business for MTD for VAT. You will still need to use software for your VAT accounting and keep your VAT accounting records digitally. Talk to your accountant to see how they can help you.

Check what’s coming down the line for MTD via the HMRC website – it might affect your business. To stay prepared, it’s worth keeping these proposed updates in mind when designing changes to your accounting processes and the software you use.