Software for MTD
During the introduction of Making Tax Digital (MTD), ICAEW is sharing the latest information about the software that taxpayers and agents will need to keep digital records and to submit information to HMRC.
Page last updated
4 march 2019
From April 2019, VAT registered businesses with taxable turnover above the VAT threshold will need to acquire a suitable commercial software product or appoint an agent to submit their VAT returns to HMRC on their behalf. Some businesses with the necessary skills will register with HMRC as software developers themselves and will develop their own bespoke software solutions, but these will be the exceptions.
It will be a requirement to keep digital records; these can be maintained in more than one program or software product. The use of spreadsheets, either to record individual transactions or as part of a suite of software and spreadsheets is permitted. However, the spreadsheet will need to be either API enabled or used in combination with an MTD compatible software product so that data can be sent to and received from HMRC systems. Where the records are maintained in more than one program or product there must be digital links between each of the pieces of software.
How an organisation approaches the selection of MTD compatible software will depend on their existing level of technology maturity and their business model. For example, an organisation that makes use of very little technology may well wish to consider spreadsheet bridging software – an application that will be able to extract the contents of a spreadsheet and uploaded it to HMRC. It is also worth considering the long-term future of an organisation. It is fair to say that the rate of change in technology and business has never been faster. That rate of change will only ever increase. As a result, all organisations will need to consider how they will remain competitive in the future. A case could, therefore, be made to invest in a more comprehensive application that could fulfil the needs of an organisation in the future.
Organisations that are already making extensive use of information technology will need to ensure that their software supplier is going to provide MTD compatible versions of the applications that they may use. In these cases the existing and future requirements of an organisation will need to be considered. In recent years we have seen a number of major changes to UK legislation; for example GDPR, auto-enrolment, open banking and MTD. In many cases it may well be easier and cost effective for an organisation to choose an application that resides, or is at least connected, to the “cloud”. Applications that are hosted on the internet (in the cloud) are able to make connections with other digital services and as a result provide increased functionality and flexibility.
To help an organisation choose software the Business Application Software Developers Association (BASDA) have created a free guide to help you select business software.;
During February 2019 the IT Faculty produced a webinar on how to choose software.
Last updated: 4 March 2019
HMRC are working with a large number of software suppliers. Many of these suppliers have already demonstrated prototype applications to HMRC.
It is essential that you check with your current software provider to understand if they are going to be providing MTD compatible software.
HMRC has a number of tools available:
The value of company, staff and client data cannot be under estimated. As a result data protection has never been more important. Use the links below to find out more as to how an organisation can protect its data assets from cyber threats and in turn improve its business resiliency.