Starting on April 1st, businesses that are VAT registered and have a taxable turnover above the VAT threshold will require a software product or have appointed an agent suitable for submitting their VAT returns to HMRC. Read the MTD for VAT requirements here.
- Spreadsheets can be used in conjunction with a bridging software to submit VAT returns to HMRC compliantly. These spreadsheets will need to be API enabled or used with an MTD compatible software so that data can easily be sent to HMRC. Do note, there must be digital links between each piece of software if records are kept in more than one program or product. Digitally kept records will become a requirement.
- There are many MTD-compatible softwares available. These systems require less effort and data input than those of a spreadsheet.
- Ecommerce businesses that have the necessary skills, may register with HMRC as a software developer and develop their own MTD-compatible software.
The first step is assessing both the existing level of technology in your business, along with your business model.
Ecommerce businesses in the infant stage may prefer using spreadsheet bridging software – a software that can extract the data from the spreadsheet and upload it to HMRC. However, if your business is growing or has plans to expand, it is important to consider the longevity of your processes. As a result, investing in an MTD-compatible software may help your business continue to be competitive along with saving time and money in the long run.
Ecommerce businesses already using an accounting software will want to check that the software supplier is going to provide MTD-compliant versions of their software. Again, the future of the business will need considering. With changes to UK law, such as GDPR, auto-enrolment, open banking and MTD, applications that use cloud-technology are becoming increasingly popular. This type of software enables increased functionality. HMRC can greatly assist in the choosing of an MTD-compatible software for your ecommerce business.
HMRC have worked closely with software providers, many of which have already demonstrated that their software is compliant.
Click here to see HMRC’s List of providers of MTD for VAT software.
Data protection has been at the forefront of our minds for quite some time now. As a consequence, software that provides online banking level security, such as Xero, have taken a great weight off the shoulders of business owners. Xero is MTD-compliant and designed to help accounting become much easier. With a great understanding of how limited time can be when running a business, their software is incredibly user-friendly.
Get In Touch
For more information regarding MTD-compliant software such as Xero, get in touch with our team, here.
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