Making Tax Digital

Everything you need to know about Making Tax Digital

Making Tax Digital is the biggest change in UK VAT legislation in recent history and means that from 1st April 2019 businesses above the VAT threshold (£85,000) will need to submit their VAT return digitally, through commercial software.

What is Making Tax Digital?

Making Tax Digital (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.

Why is Making Tax Digital happening?

  • HMRC loses over £8 billion every year due to avoidable taxpayer mistakes.
  • A modern tax system, based on digital technology will make it easier for businesses to get their tax right.
  • Reducing the amount of avoidable errors will also reduce the cost, uncertainty and worry that businesses face when HMRC is forced to intervene to put things right.
  • A more efficient VAT return process will be less disruptive to businesses in the long run.
  • Millions of businesses are already banking, paying bills, and interacting online.

What are the benefits of Making Tax Digital?

  • Customers will not have to give HMRC information that it already has, or that it is able to get from elsewhere – for instance from banks, building societies and other government departments.
  • HMRC will collect and process information affecting tax as close to real time as possible, to help prevent errors and stop tax due or repayments owed building up.
  • By 2020 customers will be able to see a comprehensive financial picture of their liabilities and entitlements in their digital account, just like they can with online banking.
  • Customers (and their agents) will be able to interact with HMRC digitally and at a time to suit them via a digital account.
  • Digital record keeping software will be linked directly to HMRC systems, allowing customers to send and receive information directly from their software.
What does Making Tax Digital mean to you as a Sage user?

Depending on which version of Sage software you are currently running, continuing on your current Sage product may mean that from April 2019 you will be unable to submit VAT returns through the HMRC gateway or software and will need to find another solution to ensure you are compliant.

As of this summer, Sage solutions will be updated to be MTD compatible with support options ranging from simple help to in-depth training so that the switch isn’t too overwhelming.

If you currently submit your VAT returns through Sage software then MTD compliance could simply mean installing the latest update.

To ensure businesses transition smoothly to the new Making Tax Digital (MTD) system, CPiO is committed to helping customers adapt their technology to assure its compatibility with the HMRC software.

A free of charge MTD module will be made available for the latest version of all Sage ERP products.

Sage 200 2018 Spring Edition: a solution will be provided for Service Pack 2 (SP2) and all future releases.

Sage will deliver these solutions to a timescale whereby customers can assess the most convenient time to upgrade.

However, we understand that not all customers using previous versions of Sage 200 will be in a position to upgrade before April 2019. With this in mind, the module can be applied to Sage 200 2011 and above with an associated cost.

In order for the MTD tool to be functional, accurate VAT Returns must be created in Sage 200, which is a standard module within all versions of Sage 200.  The MTD module uses the Sage 200 VAT Return data for the HMRC submission. We would therefore recommend that you have this process implemented in time for your penultimate VAT Return prior to the April 2019 deadline.  This VAT Return, which could be as early as December 2018, would be used as a test submission to ensure that accurate and valid data is being used.

We will support our customers every step of the way and continue to work closely with HMRC to guide you in your move to Making Tax Digital compliance.

To ensure businesses transition smoothly to the new Making Tax Digital (MTD) system, CPiO is committed to helping customers adapt their technology to assure its compatibility with the HMRC software.

A free of charge MTD module will be made available for the latest version of all Sage ERP products.

  • Sage ERP 1000 v3: a solution will be provided for Service Pack 12 (SP12)
  • Sage ERP 1000 v4: a solution will be provided for Service Pack 9 (SP9)
  • Line 500 v7.1: a solution will be provided

Sage will deliver these solutions to a timescale whereby customers can assess the most convenient time to upgrade.

However, we understand that not all customers using previous versions of Sage 1000/Line 500 will be in a position to upgrade before April 2019. With this in mind, the module can be applied to Sage 1000 v2, Line 500 v7, 6, 5.5 and 5 with an associated cost.

We will support our customers every step of the way and continue to work closely with HMRC to guide you in your move to Making Tax Digital compliance.

To ensure businesses transition smoothly to the new Making Tax Digital (MTD) system, CPiO is committed to helping customers adapt their technology to assure its compatibility with the HMRC software.

A free of charge MTD module will be made available for the latest version of all Sage ERP products.

Sage Business Cloud: Enterprise Management (Formally Sage X3) product update 9 and above: a solution will be provided

Sage will deliver these solutions to a timescale whereby customers can assess the most convenient time to upgrade.However, we understand that not all customers using previous versions of Sage Business Cloud: Enterprise Management (Formally X3) will be in a position to upgrade before April 2019. With this in mind, the module can be applied to Sage Business Cloud: Enterprise Management (Formally Sage X3) pu8, v7, 6.5 and 6 with an associated cost.

We will support our customers every step of the way and continue to work closely with HMRC to guide you in your move to Making Tax Digital compliance.

Important Statement on MTD from Sage

“Sage have not authorised any third party MTD solutions to connect to our software. We make no warranty, promise, guarantee, representation or other commitment and will have no liability or obligation whatsoever in relation to the submission of data, content or use of, or correspondence with, any such third parties, any transactions completed, or any contract entered into by you, with any such third party.

Additional VAT related support charges may be incurred by customers choosing to use a third party MTD solution

From April 2019 a charge may be applied if a customer chooses not to use the Sage 200 MTD submission module for VAT submissions. Support required as a result of third party MTD integrations impacting product functionality is likely to incur additional charges to correct potentially damaged customer data and it may be that Sage is unable to correct the damaged Customer data. Customers who choose to use a third party MTD integration will do so solely at their own risk.

HMRC guidelines are very specific that you must be able to maintain digital records and provide accurate data upon VAT submission.  Using spreadsheets alone may not comply with these guidelines and Sage will only take responsibility for data provided by Sage software.

See clause 10 of our terms and conditions for more information.

We anticipate further requirements from HMRC year on year regarding submitting tax digitally. A key benefit to using the Sage MTD module is it will evolve to fulfil these requirements, for those users who may not be able to upgrade.”

How can CPiO help you?

If you don’t process VAT through your Sage software, CPiO can help you to confidently reach compliance.

We can help you further understand what MTD is and why it is happening, what it means to you as a Sage user and your requirements moving forward.

If you are a CPiO customer wishing to discuss how Making Tax Digital will affect your business please contact your account manager.

Sage Making Tax Digital Early Adopter Programme

You can take control of MTD today by joining the Making Tax Digital Early Adopter Programme, which let’s you get your business ready ahead of April 2019 and become comfortable with MTD through your Sage software.

You’ll be able to adjust to the new way of doing things while getting compliant early. The best part? You can flag any features you’d like worked on by Sage or HMRC, and vote on software changes.

Making Tax Digital Video