Making Tax Digital for VAT

How will the changes affect me?

Making Tax Digital (MTD) is the new regime for record keeping and filing of VAT returns.

We are fast approaching the start of this new regime and we know that change can be painful so here is a quick reminder of the upcoming changes and some pointers as to how you can prepare.

When do things need to change?

From 1 April 2019 if you are registered for VAT, or are in the process of registering, you must start using MTD. This means that you may already be operating within an accounts year that includes a VAT return period that will require digital records.

Filing with HMRC

Under the new regime, VAT Information must go to HMRC via an Application Programme Interface (API). This means that you will need software, bridging software or API enabled spreadsheets. For VAT return periods starting on or after 1 April 2019 there will no longer be an option to submit your return through the Government Gateway by logging in and completing the boxes.
It will become mandatory for businesses that fall within MTD to keep digital records.

How can businesses get ready?

HMRC are not developing MTD compatible VAT software. However, their website details MTD compliant software providers here:

If you currently use accounting software, you may need to upgrade. You should be able to obtain advice and support from your existing provider via a telephone or online support service but if you prefer then please do call us. We may even get you a better deal.

f you currently use only spreadsheets and then submit the return through the Government Gateway, please get in touch to discuss the options available to you and the services we can provide
as agent.

If you currently maintain records on paper, your processes must change. You will need to either acquire and use appropriate software or engage us to do your record keeping and reporting for you.

If you have authorised us to submit your VAT return for you as agent, we can still do this. We will need to have access to the functional compatible software that holds your mandatory records.

Will there be penalties if businesses are not ready
on 1 April 2019?

HMRC are aware that these changes are challenging to businesses and they are proposing a soft-landing period of at least 12 months, with no record keeping penalties. This should allow businesses time to update their systems. During that soft landing period, it will be acceptable for data to be transferred between software and spreadsheets manually; although the final submission will have to be made to HMRC using API enabled software.

What will not change?

Businesses will not need to adjust their VAT reporting dates or be required to provide any more VAT information than they
do already.

The current exemptions for electronic submissions will also apply to MTD, e.g. on the grounds of a taxpayer’s religious beliefs, practical inability to use a functional compatible software system or when subject to insolvency procedures.

Courtesy of Price Bailey- 10/01/19

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