For many taxpayers Making Tax Digital (MTD) for VAT is now just two VAT return quarters away. Businesses should take action now to ensure that their accounting systems are equipped to meet the new filing requirements which come into force on 1 April 2019.
You will be required to operate MTD and file your VAT returns digitally from 1 April 2019 if you are:
- A VAT registered entity; and
- Have taxable turnover of more than £85,000.
There are limited exemptions available for taxpayers who unable to meet the digital filing requirements as a result of religion, age, disability, remoteness of location or are subject to an insolvency procedure, but otherwise a VAT registered business will only be exempt from the changes if it has taxable turnover of below £85,000. Such voluntarily registered businesses can elect into the requirement to file under the MTD regime and may wish to do so particularly if they expect taxable turnover to exceed the £85,000 compulsory registration limit.
Currently VAT returns are submitted via the Government Gateway, either using accounting software or by typing the nine box values into the Gateway. Many businesses and particularly those with more complex VAT affairs (such as partial exemption) currently use spreadsheets to collate and adjust data derived from accounting software to calculate manual entries for input via the Government Gateway.
Going forwards, businesses will need to ensure that they have software in place which will digitally submit the information directly to HMRC. Those already using accounting software to automatically submit VAT returns should check with their software provider that their systems are or will be MTD compliant. Others should consider taking steps now to introduce appropriate accounting or ‘bridging’ software to enable them to meet the MTD filing requirements.
The Government are committed to the implementation of MTD and whilst not yet confirmed it is expected that MTD for income tax will become mandatory from 1 April 2020 followed shortly after by MTD for corporation tax.
We can help you make the transition to MTD simple and hassle free.
Please contact a member of the MTD to discuss your requirements further – give us a call on 0113 231 4131 or send an email to firstname.lastname@example.org.