Making Tax Digital – The Road Ahead

Making Tax Digital (MTD) is HM Revenue & Customs attempt at modernising the UK’s tax administration system. The underlying objective to become the most digitally advanced, effective and efficient tax administration in the world.

The first phase of MTD implementation commences from 1st April 2019 and requires all VAT registered businesses with a turnover above the VAT registration threshold (currently £85,000) to keep digital records and submit their VAT returns via the MTD system.

It is currently proposed that quarterly MTD filing for Corporation Tax & Income Tax will be necessary from April 2020.

Wilson Wright will release further information pertaining to this in due course, however, we envisage that most businesses will be better placed for the 2020 implementation by virtue of having to comply with the VAT regulation in April 2019.

Are you ready?

We want to help you and give you peace of mind to ensure you are prepared. Please click below if you are:

Existing VAT return client

  • Wilson Wright have taken part in HMRC’s pilot scheme and have engaged with the proposals at the earliest opportunity to ensure that our clients stay ahead of regulatory change.
  • If you are an existing Wilson Wright client and we manage your VAT affairs, we will be communicating with you over the coming months to make any modifications we deem necessary to be ready for April 2019.
  • 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 & 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’ HMRC MTD compatible software provider.

Existing client with no VAT return services provided

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 digital accounting records 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.
  • Use HMRC compliant commercial software or appoint an agent to submit financial information to HMRC on their behalf.
  • Change the way currently submit VAT returns as they 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 your existing systems and the procedures in your business.
  • This is an ideal opportunity to review current bookkeeping / accounting practices and to streamline your processes, maximising the usage of technology solutions which have developed in recent years.
  • There are a number of MTD compliant software solutions and products 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

Deferrals

A six-month deferral will apply to around 3.5% of businesses who fall into one of the following categories:

  • Trusts
  • ‘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.

For more details visit the MTD ICAEW Guidance note.

Administration

  • 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.

Our Clients

  • We have taken part in HMRC’s pilot scheme and have engaged with the 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’ HMRC MTD compatible software provider.

How we can help you

  • Ensure that your current software is on HMRC’s approved list.
  • Evaluate and review your current VAT processes.
  • Provide guidance on selecting software.
  • Advise on the availability and use of separate ‘bridging software’, if retention of spreadsheet accounting is key.
  • Complete a review of your financial processes and tasks with a view to enhancing the efficiency and digitisation of your systems.

Not a client? How we can help

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 software solutions and products 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

Deferrals

A six-month deferral will apply to around 3.5% of businesses who fall into one of the following categories:

  • Trusts
  • ‘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.

For more details visit the MTD ICAEW Guidance note.

Administration

  • 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.

Wilson Wright

  • 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.

Contact our specialists

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 & add value at every step.

Why Wilson Wright?

  • We have taken part in HMRC’s pilot scheme and have engaged with the proposals at the earliest opportunity to ensure that our clients stay ahead of regulatory change.
  • If you are an existing Wilson Wright client and we manage your VAT affairs, we will be communicating with you over the coming months to make any modifications we deem necessary to be ready for April 2019.
  • If you are not an existing Wilson Wright client or you are, but have your VAT affairs managed externally, we are here to help guide you through the transition.
  • We are already assisting many clients in preparing & implementing systems to get them ready for MTD.
  • Wilson Wright LLP is a Xero ‘Making Tax Digital Ready’ agent. Xero is an ‘approved’ HMRC MTD compatible software provider.

For more information, please contact Jamie Grossman on +44 (0)20 7832 0444 or jamie.grossman@wilsonwright.co.uk who is on hand to help, guide and answer any questions or concerns you may have.