MTD for VAT
From April 2019, all VAT registered businesses and organisations with taxable turnover above the VAT threshold of £85,000 will be required to:
- Maintain accounting records digitally in a software product or spreadsheet. Maintaining paper records will cease to meet the legal requirements in tax legislation.
- Submit VAT returns to HMRC using a functional compatible software product that can access HMRC’s API (Application Program Interfaces) platform.
- Under the new regime businesses and organisations are required to use HMRC compliant commercial software or appoint an agent to submit financial information to HMRC on their behalf.
- Businesses & organisations will no longer be able to manually complete VAT returns via their existing HMRC online account.
No changes are being made to
- The underlying VAT rules.
- The information contained on the VAT return required to be submitted to HMRC; the VAT return will contain the same nine boxes that it does currently.
- The current filing and payment deadlines for VAT.
MTD – HMRC Approved Software
- How businesses approach the selection of MTD compatible software will depend upon the existing systems & procedure in your business.
- This is an ideal opportunity to review current bookkeeping / accounting practices and to streamline processes, maximising usage of technology solutions which have developed in recent years.
- There are a number of MTD compliant available.
MTD – HMRC Exemptions for VAT
With all regulatory changes there will be exceptions;
- VAT registered businesses with turnover below the VAT threshold are exempt but can opt in voluntarily;
- An exemption for the digitally excluded is included in the regulations and mirrors the current exemptions from online filing for VAT. The exemptions cover those that do not use computers for religious reasons and those that are unable to comply because of age, disability or location (or for any another reason);
- When a bankruptcy order or winding-up order or award of sequestration is made or an administrator is appointed in relation to that person;
- When that person is put into administrative receivership;
- When that person, being a corporation, passes a resolution for voluntary winding up;
- When any approved voluntary arrangement comes into force in relation to that person;
- When a registered deed of arrangement takes effect in relation to that person; or
- When that person’s estate becomes vested in any other person as that person’s trustee under a trust deed
A six-month deferral will apply to around 3.5% of businesses who fall into one of the following categories:
- ‘Not for profit’ organisations that are not companies (this includes some charities)
- VAT divisions and VAT groups
- Public sector entities that are required to provide additional information alongside their VAT return (such as Government departments and NHS Trusts)
- Local authorities and public corporations
- Traders based overseas
- Those required to make payments on account
- Annual accounting scheme users
Please note these groups will be mandated to use MTD from 1 October 2019.
- A penalty system will be implemented by HMRC and is currently being consulted upon.
- HMRC have confirmed that for the first year, it is unlikely penalties will be applied, to allow businesses and organisations to familiarise with the new regime.
- We have taken part in HMRC’s pilot scheme and therefore have engaged with proposals at the earliest opportunity to ensure that our clients stay ahead of regulatory change.
- Our team of committed professional advisers are trained to know that no two business are the same. We tailor bespoke bookkeeping / accounting solutions for our clients, making changes as our clients grow and add value at every step.
- We are already assisting many clients in preparing and implementing systems to get them ready for MTD.
- Wilson Wright LLP is a Xero ‘Making Tax Digital Ready’ agent. Xero is an ‘approved’ Wilson Wright software provider.
How we can help you
- Ensuring that your current software is on HMRC’s approved list.
- Evaluate & review your current VAT processes.
- Provide guidance on selecting software.
- Advice on the availability & use of separate ‘bridging software’, if retention of spreadsheet accounting is key.
- Complete a review of financial processes & tasks with a view to enhancing efficiency & digitisation.
Posted in: MTD