Making Tax Digital – Lets start with VAT
1 June 2018
HMRC are on a path to bring tax to the 21st Century and would like to make filing tax returns all digital. As you can imagine the sheer scale of the task the timescale have been setback. Although voluntary test runs are correctly being conducted, these will remain voluntary until at least April 2020 with the exception of VAT.
From April 2019, Making Tax Digital (MTD) for VAT will become compulsory for VAT registered business trading above the VAT registration threshold (currently £85,000) from 2019. Specifically, for VAT return periods commencing on or after 1 April 2019. This is now less than a year away, so if you have not already done, so then you should really think about preparing yourself for the change.
Record keeping must be in a digital form, which can include spreadsheets and third party tools (bridging software). However, HMRC would prefer you to use software.
Submitting VAT returns through the current web portal will no longer be available. Instead, VAT figures will need to be submitted directly from digital records to HMRC, without any manual rekeying of data, via a direct link between the software and HMRC.
If calculations are required, such as for partial exemption or fuel scale charges, for example, these calculations can sit outside of the accounting software, providing the resulting adjustments to the VAT return are entered into the software, before being submitted to HMRC.
MTD may sound like a nightmare or another ‘ToDo’ you could do without, but please talk to us as we can help you comply with minimal fuss.