Making Tax Digital for VAT

From April 2019 VAT registered businesses and organisations with taxable turnover above the VAT threshold of £85,000 will be required to:

  • Maintain their accounting records digitally in a software product or spreadsheet. Maintaining paper records will cease to meet the legal requirements in tax legislation.
  • Submit their VAT returns to HMRC using a functional compatible software product that can access HMRC’s API (Application Program Interfaces) platform.

The requirements do not apply to VAT registered businesses with taxable turnover below the VAT threshold (eg, those that have registered voluntarily).

HMRC has announced a deferral to the start date of 6 months for some more complex businesses.

Businesses within scope will need to acquire a suitable commercial software product (https://www.icaew.com:443/technical/tax/making-tax-digital/mtd-guidance/software) or appoint an agent to submit returns to HMRC on their behalf.

HMRC’s online VAT return will remain available only to businesses that are not within the scope of MTD for VAT (eg, businesses that complete a VAT return but have taxable turnover below the VAT threshold).

Some businesses with the necessary skills will register with HMRC as software developers themselves and will develop their own bespoke software solutions, but these will be the exceptions.

No changes are being made to:

  • VAT rules other than those that relate to record keeping and filing.
  • The amount of information submitted to HMRC; the VAT return will contain the same nine boxes that it does currently though the regulations do allow for additional information to be submitted on a voluntary basis.
  • The current filing and payment deadlines for VAT.

For further information please contact Don Fisher or Kamila Piszczek.