We’ve gathered together the questions that you've been asking us. We'll update this discussion regularly and we'll also include any important notices.
What tax code should I use?
If you're unsure which tax codes affect which area of your VAT Return, why not use one of our quick tax code guides to help you get your VAT right every time.
What is Making Tax Digital?
As of April 2019, businesses with a taxable turnover above the VAT threshold of £85,000 are required to file their VAT returns electronically using accounting software, and are obligated to keep digital records of their transactions. Manual submission through the HMRC gateway for VAT will no longer be accepted for most businesses.
What is a digital record?
You’ll need to keep your records digitally – this means that you are required to store a digital copy of the transactions which make up the nine boxes of the VAT return. This needs to be kept in functional compatible software. This is software or a set of software programs which must: record and preserve digital records, send the data to HMRC through the API and receive information from HMRC via the API.
Can I still use spreadsheets?
You don’t need to keep any additional business records because of MTD. However, business records must be kept digitally to be compliant. If you use spreadsheets, the spreadsheets must be able to submit the required data to HMRC digitally. The spreadsheets must preserve any digital records so you will need to ensure that the data is not accidentally over-typed or deleted – software will make this much easier.
Why aren’t you updating all of your software?
Sage are committed to investing in our Sage Business Cloud software and all of our time and resource is focused on making these solutions really deliver for our customers. If you’re on software which isn’t MTD ready then the best option is to move to the Sage Business Cloud. We are aware that making this move immediately could be a challenge for some businesses, so we have developed solutions for a number of products which will enable you to meet your requirements, speak with our sales team or account manager to discuss the best option for you.
How can I check if I’m exempt?
You will not have to follow the Making Tax Digital rules where HMRC is satisfied that: your business is run entirely by practising members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers). It is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reasons of age, disability, remoteness of location or for any other reason, you are subject to an insolvency procedure. HMRC will decide if you meet exemption criteria so check with them directly and don’t just assume you meet the criteria, you don’t want to end up with a penalty.
I’m not sure if I’m on compatible software how can I check?
I’ve been told there will be free software available?
HMRC have been clear on this and section 5.3 of the communication pack states HMRC will not be offering its own software products, but will provide the Application Programming Interfaces (APIs) that commercial software developers will use to develop a range of applications that will enable businesses to keep their records digitally and integrate with HMRC systems.
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