Making Tax Digital for VAT

Making Tax Digital for VAT

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Making Tax Digital (“MTD”) for VAT came into force on 1 April 2019. As a result of these provisions, it is now 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 previous method of submission via the HMRC portal is now unavailable. HMRC must approve any opt-out under minimal circumstances.

In addition to the digital submission requirement, specific 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 the following:

  • 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’.

Who will be impacted first?

  • April 2019—All businesses above the VAT threshold (£85,000) will be required to keep digital records and file their VAT returns using MTD-compliant software. 
  • April 2020 – The timings for MTD for corporation tax have yet to be confirmed, but it will not become mandatory before April 2020.
  • 2020 – All those who complete self-assessment tax returns – self-employed, partnerships, trusts and landlords – don’t yet have a set date for mandatory income digital tax reporting.

This affects all VAT returns for VAT periods starting on or after 1 April 2019 (October 2019 for deferred business), so individuals and companies need to follow the new process.

How we can help with Making Tax Digital for VAT

  • Help support you via our free technical material to learn more about MTD for VAT.
  • Check if your accounting software is MTD-ready and on HMRC’s “approved” list.
  • 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

How can we help you?

Get in touch with us or Find an office closest to you