Making Tax Digital (MTD) for VAT

Making Tax Digital (MTD) for VAT

MTD for VAT will be implemented in April 2019. Compliance with the regulations is mandated for VAT return periods beginning on or after 1 April 2019.

Under the regulations, businesses must keep digital records for VAT purposes and provide their VAT return information to HMRC using HMRC-approved software e.g. ClearBooks, Xero, FreeAgent and Sage Line version 24.2 and above.

HMRC Pilot Scheme

Since April this year, HMRC has been running a pilot scheme for MTD for VAT. As an HMRC Agent we have signed up to the pilot and are actively involved now and will be in the lead up to April 2019 to help ensure the transition for our clients is as smooth as possible.

How does this affect me?

If you are registered for VAT and either: –

  • above the £85,000 threshold and filing your own VAT returns already using digital records (e.g. Non MTD-enabled online accounting software, Sage Line 50 Version 23 and below, spreadsheets etc.), or
  • above the £85,000 threshold and filing your own VAT returns using manual records (e.g. cashbook)

you will be required to use MTD compatible software with effect from 1 April 2019 and so you now need to act.  You will not be able to carry on using HMRC’s online service to submit your returns using the process you currently use.

Or, alternatively if you are either: –

  • currently not registered for VAT, or
  • registered for VAT, below the £85,000 threshold and filing your own VAT returns

Good news! As such, unless you either register for VAT and/or voluntarily move to MTD for VAT, nothing will change for you now. You will be able to carry on using HMRC’s online service to submit your returns using whatever process you currently use. However, it is important to continue to monitor whether your 12-month rolling taxable turnover exceeds the VAT registration threshold at which point compulsory registration and MTD is mandatory.

Helping with the challenges

Whatever the size of your business, there is a time of great change ahead, and we are on hand to help with the challenges. The introduction of MTD for VAT is coming very soon, so we advise you to be prepared. One key area to address is whether business transactions are currently recorded digitally.  If they are, consideration of whether those digital records are MTD-compliant should be given. If they are not, thought should be given to recording some/all transactions on a digital basis.

We recommend that you contact your software supplier for further instructions on how to ensure that your accounting software is MTD-enabled in time for the new regime.

We would be happy to help you with any issues arising from MTD for VAT. Our firm has been providing online accounting software for 5 years and we are able to advise on these and other relatively low-cost MTD-compliant solutions including associated training requirements.

MTD for VAT Information Sheet

We have prepared an Information Sheet setting out what you need to know, you can download it here