Making Tax Digital – How does it impact the construction industry?

Category: Making Tax DigitalProperty & Construction - Posted On: Jan 18 2019

Now that the festivities are over, and the new year is here, January is a month where we start thinking about the year ahead. One of the biggest changes, from a tax perspective, is the introduction of Making Tax Digital (MTD) from 1 April 2019. The attitude that many were taking was that HMRC would delay the new compliance regime, but the launch date is not moving and it is fast approaching!

Here are a couple of points to help you understand if your company will be affected and what you need to do:

  • What companies are affected – If you are VAT registered and have a taxable turnover over the VAT threshold (currently £85,000) you will need to be compliant from 1 April 2019.
  • What is required under MTD – HMRC require companies to record and preserve their records in a digital format, and use compliant software that has a data link with HMRC to submit their VAT returns.
  • What software is compliant – There are many software companies that are compliant, the most commonly used by our existing clients are Xero, Sage, Quickbooks and Freeagent.
  • Is your software up to date – Cloud based subscription software’s such as Xero and Quickbooks will update automatically, however if you have an older sage licence or use a desktop software this may not include the MTD module and will require updating. If you use a bespoke/specialist piece of software then we would recommend contacting your current software provider to ensure that this will be compliant by 1 April 2019.

For companies working in the construction industry, additional functions such as CIS tax and Job costing are often required. Working together with our clients, we find that both Sage and Xero are good ‘off-the shelf’ packages, with Xero having a marketplace of add-on’s which integrate with the accounting package. These add-on’s can streamline functions such as job costings, quotes, and project management, and because they integrate directly with Xero it takes away any data entry duplication, improving efficiency, the quality of management information and ultimately saving you time.

If you would like any advice on Making Tax Digital or on updating your existing software, please email our EQ Property & Construction team at or contact one of our offices.