HMRC's Making Tax Digital (MTD) Initiative
Making Tax Digital (MTD) is a fundamental change to the UK tax system; it will affect how UK businesses maintain their accounting records.
From 1 April 2019 all businesses with turnover above the VAT registration threshold will be required to:
1. Maintain their accounting records DIGITALLY in an accounting software.
2. Submit their VAT Returns to HMRC online using compatible software - HMRC's portal will no longer be available from 1 April 2019.
Businesses which do not maintain digital accounting records or submit their VAT Return to HMRC digitally will face financial penalties.
Software such as Xero and Sage Business Cloud Accounts are MTD ready and use of these software will ensure that a business is MTD compliant.