What is Making Tax Digital? (MTD)
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 keep on top of their affairs.
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 tax payers to get their tax right.
From April 2019, 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.
What is MTD Compatible Software?
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.
Is my Alto software MTD compatible?
Alto does not hold all the information for filling in a VAT return so cannot be MTD compatible on its own. However, it does record and preserve digital records so when used alongside other programs it is still a component of functional compatible software. To find out which accounting software is compatible and can link to the HMRC API go to: https://www.gov.uk/guidance/software-for-sending-income-tax-updates
Are any changes being made to Alto for MTD?
Where Alto is used as a component of function compatible software there needs to be a digital transfer between it and the software that will be in communication with HMRC via the API. Alto holds the transactional level details so all that needs to be included in the transfer is the summary of the information that allows your business to compile your VAT return. Note that this digital transfer is not mandatory until April 2020, but we are already in discussion with the providers of other accounting software regarding file formats for this transfer and plan to have digital transfer in place well in advance of the April 2020 deadline.