After speculations about delays, it is now incorporated into regulations that Making Tax Digital (MTD) for VAT will come into force for VAT with effect from 1st April 2019.
Businesses that are compulsorily registered for VAT because they have taxable turnover in excess of the registration threshold will need to comply with MTD. This will be effective from their next VAT quarter that commences after the 1st April 2019. That means, if your VAT quarter starts on 1st March 2019, you won’t need to comply until 1st June 2019.
Businesses that are VAT registered on a voluntary basis and have taxable turnover below the VAT registration threshold of £85,000 can comply with MTD on a voluntary basis if they wish.
How does it work….
HMRC will require a digital link between transactional data and the VAT calculations. This means that you will no longer be able to type in the VAT figures to a VAT return as before, and will need to submit your VAT details to HMRC using MTD compliant transactional software.
There has been lots of speculation as to whether businesses can continue to use spreadsheets to record their VAT transactions. For those concerned, they will be pleased to know that spreadsheets can be used, but must users must use “functional compatible software” to submit their data to HMRC. At present, there’s no real detail on what this means, but we understand that software companies are working to develop such a solution - at present it is not known at what cost.
As with other digital HMRC services, there will be exemptions for digitally excluded users. The most common exemptions are due to Religious grounds, remoteness of location making internet connection unusable and disability.
So, after all of the hype, it’s finally around the corner, and it is likely that this ill be just the start before all businesses and taxes are captured by MTD.
What do we recommend to our clients?
As QuickBooks Platinum Pro Advisors, we are recommending to all of our affected clients to start to transition over to QuickBooks Cloud based software.
Using QuickBooks online will ensure you are MTD ready, as well as being able to bring a host of other benefits to your business information records.
Additionally, if we are given access by your QuickBooks account as your accountant, we can keep an eye on your records and provide guidance to you along the way, or even carry out the whole book keeping process if you prefer.
Finally, we are able to offer QuickBooks online to our clients at discounted rates, for the life of your subscription
If you would like to discuss how you can prepare for MTD, then please don’t hesitate to contact one of the team at Townend English on 01759 305 989 or email@example.com
James Foxton FCA 26th June 2018