Making Tax Digital (“MTD”) for VAT comes into force on 1 April 2019. As a result of these provisions, it will be mandatory for all VAT registered businesses with a taxable turnover above the registration threshold (currently £85,000) to keep digital records and submit their VAT returns quarterly through HMRC-approved software, using an application programming interface (API).
The current method of submission via the HMRC portal will be unavailable. There are very limited circumstances for HMRC to approve any opt out.
In addition to the above digital submission requirement, certain data must be recorded digitally within ‘functional compatible software’ (FCS). The FCS can be a software program or a set of software programs (including spreadsheets provided certain conditions are met) that must be capable of:
- Holding all the mandatory digital data as required under MTD;
- Submitting the nine VAT return figures to HMRC for the MTD specific API;
- Receiving information from HMRC via the API;
- Transferring data between software programs via a ‘digital link’.
As this will affect all VAT returns for VAT periods starting on or after 1 April 2019 (October 2019 for deferred business - see flyer for more information), individuals and businesses need to prepare now for this change.
How we can help with Making Tax Digital for VAT
- Help support you via our free webinars to learn more about MTD for VAT
- Check if your accounting software is MTD ready and on HMRC's "approved" list
- Consider options to use a separate "bridging software" if required
- Complete a VAT review to ensure you are MTD compliant
- Provide in-person training to your Tax team
- Help you get ahead of the curve - other taxes are planned to go digital in 2020
Mazars offer an HMRC compatible software solution for businesses who are not able to submit MTD compliant VAT returns using their existing ERP system.
MTD for SME businesses
If you have any questions or would like to discuss the changes, please feel free to get in touch.