When Making Tax Digital (MTD) was first announced, HM Revenue & Customs said that free software would be available for the most straightforward small businesses. Under MTD records of business income and expenses will be required to be kept digitally using a software product or app.
HMRC have since provided clarification on which straightforward businesses will be able to use free software. This is expected to mean businesses with no employees, no VAT, and using simplified cash basis accounting. Any business trading as a Limited Company will be unable to use the free software.
Gary Turner, Managing Director of one of the leading accounting software products, Xero, has now said that the Xero package would be ready for the commencement of MTD, but it would not be available for free. He explained, “We cannot see how we would deliver our level of service to our customers for free, it would mean compromising something and we do not like the thought of that.”
It will be interesting to see how the roll out of the MTD programme will impact on customers and whether they feel the system works for them in terms of proving the high quality service it claims to. What is likely, is that clients will start to look elsewhere to external software providers such as Xero and Quickbooks to deliver the quality service they need in addition to benefits such as management reports and the advisory support they need to manage their account.
Before MTD is introduced in April 2019 for VAT registered businesses which have a turnover above the VAT threshold (£85,000) a suitable software package will need to be found and implemented. We can advise on the options available – please speak to your usual contact Partner or Manager or get in touch with your local Whiting & Partners office.