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Unprepared firms urged to consider accounting software options as MTD looms

Chartered accountants Newby Castleman fear many firms are unprepared for the launch of Making Tax Digital for VAT (MTD) in April, and are urging those who have yet to update their systems to be careful of overspending on expensive new systems which may not be the best solution for them. 

MTD applies from 1st April 2019, and many businesses still have not received official notification from HMRC that they are affected. Under MTD, all businesses with a taxable turnover above the VAT threshold must keep digital records and send VAT returns digitally to HMRC using MTD-compliant software.

Tony Hyde, Senior IT Manager at Newby Castleman, said:

“While most bigger businesses will be prepared for the changes MTD brings, many small and medium-sized enterprises (SMEs) still may not be – indeed, HMRC admitted earlier this year that it was still in the process of sending letters to all businesses affected by MTD.

“There will be a lot of smaller businesses caught by MTD, which do their accounting using spreadsheets or accounting software that are not MTD-compliant. They will review their systems very soon to ensure they will be able to submit their VAT Returns commencing on or after 1st April via MTD-compliant software as this will not be possible via the existing HMRC portal.”

There are several MTD-ready accountancy software packages available to businesses, some of which are exclusively cloud-based, such as Xero and QuickBooks, and some of which are cloud and desktop-based, such as SAGE. Newby Castleman is recommending companies take steps to find out which solution would be best suited to them.

Tony continued:

“For some businesses, the cost implications of being MTD-compliant may be excessive. However, there are solutions out there which are potentially more cost-effective; for example, so-called ‘bridging software’, which can help businesses more comfortable using spreadsheets or those that wish to continue using their existing non-MTD compliant software for the filing requirements of MTD.

“Different software options will suit different companies, but ready or not, MTD is coming in April, and those firms uncertain about their preparedness for it should consult with a qualified accountant as soon as possible, to avoid potential problems with their accounting.”

Newby Castleman is one of the Midlands’ leading independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses. For further information, telephone the Leicester branch on 0116 254 9262, the Loughborough branch on 01509 263500 or visit the website at www.newbycastleman.co.uk.


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