Making Tax Digital is a key part of the government's plans to make it easier for individuals and businesses to get their tax right and to keep on top of their accounting practices.
HMRC's ambition is to become one of the most digitally advanced tax administrations in the world.
Making Tax Digital is making fundamental changes to the way the tax system works - transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
From April 2020 most VAT registered businesses with a turnover above £85,000 must keep their VAT records digitally and use Making Tax Digital compatible software to submit their VAT returns.
This article includes:
- What is MTD compatible software?
- Is my Alto software MTD compatible?
- Are any changes being made to Alto for MTD?
Functional compatible software is a software program, or set of software programs, products or applications, that must be able to:
- Record and preserve digital records
- Provide to HMRC information and returns from data held in those digital records by using the API platform
- Receive information from HMRC via the API platform
Alto does not hold all the information for filling in a VAT return so it cannot be HMRC making tax digital compatible on its own.
Alto does record and save digital records so when used alongside other programs, it is still a component of HMRC compatible software.
To find out which accounting software is compatible and can link to the HMRC API, visit https://www.gov.uk/guidance/software-for-sending-income-tax-updates
Where Alto is used as a part of HMRC compliant accounting procedures, there needs to be a digital transfer between Alto and the accounting software that will be in communication with HMRC via the API.
Alto holds transactional details that need to be included in the transfer summary of information that allows your business to compile your VAT return.
This digital transfer is not mandatory until April 2020, we are already in discussion with the providers of HMRC compliant accounting software providers regarding file formats that are compatible for digital transfer and already have some digital transfer functions in place