Dragon2000 is urging garages to ensure they are compliant with the Government’s new Making Tax Digital service, designed to make it easier for businesses to get their tax right and keep on top of their affairs.
From 1 April 2019, all VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are required to keep their VAT business records digitally and send their VAT returns using MTD-compatible software. In simple terms, garages will no longer be able to manually type in the VAT return figures into the HMRC system, as it must be submitted digitally.
From the April 2019 deadline, any software that prepares a VAT return to send to HMRC for businesses must use MTD and be MTD-compatible. This means that it can integrate with HMRC systems for VAT submissions.
Data must be exchanged digitally between all software used by a dealer for VAT as HMRC’s goal is to eliminate paper-based processes and manual data entry errors in reporting VAT figures. The usual HMRC deadlines for sending VAT returns and making payments will not be changing. The introduction of Making Tax Digital does not require garages to keep any additional business records, but business records must be kept digitally to be compliant.
Mark Kelland, Commercial Manager of Dragon2000 comments: “We have been in regular communication with the HMRC MTD development team on all things Making Tax Digital since 2017, so we have a good grip on what will be required by garage operations and workshops.
“Provided that those accountants or book-keepers working on behalf of garages have registered as a tax agent with the HMRC to submit returns and are using MTD compatible accounting software, then garages will comply, as long as their records are kept digitally.
“There are some exceptions, for a small minority with more complex tax requirements, who will have the start date deferred for six months. However, this only applies to categories of businesses that are trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.
“Garage businesses are unlikely to fall into those categories of having complex tax affairs, so they will not be able to put off thinking about Making Tax Digital until October – they will need to act now if they do not have any accounting software in place, or a dealer management system to record transactions digitally. If garages have older accounting software that isn’t MTD compliant, don’t have an accountant that submits VAT returns on their behalf, or don’t have any digital accounting software in place at all, they will need some help.
“Dragon2000 is offering a Making Tax Digital Package to help garages to fully comply in time for the deadline, particularly if they aren’t utilising a dealer management system, which is the first step in complying with digital record-keeping rules.
“Garages who are DragonDMS users and use our comprehensive integration into Sage 50c for their accounting will not need to do anything for the impending Making Tax Digital deadline. They are already ticking all the boxes to be fully compliant with the new HMRC service as the Sage cloud software is MTD ready and they are seamlessly integrating records of the underlying purchase and sale transactions stored digitally within the DragonDMS into their accounts.”
Dragon2000 has over 20 years of experience, helping garages and workshops grow their businesses. Dragon2000 builds and hosts mobile responsive websites and the firm’s software is used by over 1,000 garages and workshops in the UK and overseas. DragonDMS is a complete Dealer Management System - integrated software for car sales, workshop, parts inventory and accounting. DragonDMS software is integrated with Sage50, enabling the motor trade to easily produce accounting reports.