Making Tax Digital (MTD) is a key part of HMRC’S ambition to be one of the most digitally-advanced tax administrations in the world. It aims to modernise the tax system making it more effective, efficient and easier for customers to comply.
From 1 April 2019, VAT is the first area of taxation to be impacted by MTD and it is vital that your business is ready. Businesses with a turnover that is above the VAT threshold (£85,000) must maintain digital business records and submit their VAT return through the new MTD system. The option of submitting your return through the Government Gateway i.e. HMRC website will no longer be possible. This means you will need either MTD compatible software, bridging software or API enabled spreadsheets.
What you need to do now
- If we currently prepare and/or submit VAT returns for you as an agent we will continue to do this.
- If you currently use an accounting software package such as Sage or Xero you may need to upgrade to ensure that you are on the most recent version which is MTD compliant. You can contact your software provider for advice or if you prefer you can contact us as we can arrange upgrades as required.
- If you currently use only spreadsheets and submit through the Government Gateway, please get in touch to discuss options available. You will be able to continue using spreadsheets provided they contain the mandatory information required by HMRC. However you will need a bridging software in place to enable you to submit to HMRC. These are widely available or we can provide this service to you using our in-house software.
- If you currently maintain records on paper your records and VAT return process must change. You will have to use appropriate software for your business to maintain your records digitally and submit to HMRC. Please contact us now to discuss your options.
If you are required to comply with MTD for VAT you must do so for the first VAT return period beginning on or after 1 April 2019 and therefore you must have the appropriate software solution in place for that time. Once this is complete you must sign up for MTD for VAT however it is important to do this only if you are mandated to comply with MTD and when you are ready as the process cannot be reversed. When ready to sign up for MTD for VAT you should only do so 5 working days after the last non-MTD submission and 15 working days before your first MTD VAT submission. Please refer to timelines set out below:
1 April – 30 April
1 April – 30 June
1 May – 30 July
1 August – 30 July
|Submit last non MTD VAT return||7th May||7th May||7th June||7th July|
|Deadline for signing up||16th May||17th July||16th August||13th September|
|First MTD VAT return due||7th June||7th August||7th September||7th October|
If you would like to discuss MTD for VAT further please do not hesitate to contact Stephen McConnell, Business Services Partner or your usual contact within Baker Tilly Mooney Moore.