24/07/2018
Making Tax Digital – is your charity ready?
Charities should prepare early to ensure a smooth transition to Making Tax Digital (MTD) reporting on VAT returns, says HWB’s charity specialist Michaela Johns.
From 1 April 2019, paper records will no longer be sufficient and it will be mandatory for charities which fall within the scope of MTD to keep digital records and to submit VAT returns directly from MTD-compliant accounting software. The government’s scheme for VAT returns will be mandatory for not-for-profit organisations with a turnover of more than £85,000.
Concerns were raised at the Charity Tax Group’s Annual Tax Conference that eligible software is not being provided and this could force charities to spend more money on getting ready for MTD.
Michaela, who leads HWB’s specialism in the not-for-profit sector, says: “This is a major shift in the HMRC reporting regime and it’s important that all charities update their systems. While some may have appropriate measures in place, it’s fair to say many charities may be underprepared.
“Although the government has said that there will be a ‘soft landing’ for charities where they will not be fined for non-compliance in the first year, I would strongly advise decision-makers to comply early as this will make the transition process a much easier journey. With the right planning and tools in place, there’s no reason why transitioning should have a negative cost impact.
“Online accounting systems with real-time reporting such as Sage, Xero and QuickBooks, are being encouraged by HMRC and also offer a number of other benefits for book-keeping, so I would encourage trustees and senior management to look into these options if they haven’t already done so.”
For advice about complying with MTD and making the transition to digital reporting, please contact our MTD specialist Andrew Kershaw on 023 8046 1245.
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