VAT digital software will not only serve as a tool to store a digital record of transactions but will also serve as a single source for creating and filing compliance reports directly from the software. The software must have the capability to interact with HMRC server via API securely.
In the first phase, HMRC expects the businesses to use commercial software that can at least retrieve VAT obligation and submit the VAT return. Companies are free to use either online or offline software as long as HMRC recognises the software. Also, one can buy the tool from a software supplier or build VAT digital software for personal use.
In future as the initiative matures HMRC intends to make the process more integrated, like, requiring the companies to even make VAT payments from the same software used for record-keeping.
When you are choosing a MTD Compliant VAT Software, please make sure the software does the following bare minimum.
1. Retrieve VAT obligation
2. Submit VAT return
Please note, after MTD comes into force, in the first few quarters HMRC may allow bridging software to submit returns, however, please be aware that this is just a short term relief and soon every business will be asked to shift to a VAT digital software. So, prepare for the long-term.
We strongly recommend online VAT software from a reputed vendor like TopNotepad, a low cost accounting software for MTD VAT recognised by HMRC. Online gives you the freedom to access your data from anywhere and provides enterprise-grade security and backup.