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Making Tax Digital for VAT - Are you compliant?

18 March 2019


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HMRC has recently delayed the introduction of Making Tax Digital (MTD) for some businesses by six months, from 1 April 2019 to 1 October 2019.

MTD requires that submission of the VAT return for businesses with a taxable turnover exceeding £85,000 per year is made from API-enabled software rather than by rekeying data into the HMRC website and that accounting records are maintained digitally. MTD only applies to VAT returns that commence on or after 1 April (or 1 October), so a three month return ending 31 May 2019 is not within MTD.

Businesses for whom MTD  has been delayed:

  • Trusts
  • ‘Not for profit’ organisations that are not set up as a company
  • VAT divisions
  • VAT groups
  • Public sector entities required to provide additional information on their VAT return (such as government departments and NHS Trusts)
  • Local authorities
  • Public corporations
  • Traders based overseas
  • Those required to make payments on account, and
  • Annual accounting scheme users

If you currently prepare the VAT return using any of the following three methods, James Cowper Kreston has a solution to enable you to meet the MTD requirements for at least the first year to April or October 2020.

  • manual records;
  • solely spreadsheets;
  • non-compliant accounting software, but have the function to export the VAT return to Excel.

The solution, a bridging software product, will allow the VAT return to be submitted from the spreadsheet. This product is particularly useful as a short-term solution for a year, during the “soft-landing” phase of MTD. This introductory phase does not insist upon digital links back along the chain of data preparation, which only need to be introduced after one year of MTD. In the first year the only requirement of MTD is to use digital records and  to submit returns from API-enabled software. An enhanced version of this bridging software is available which provides a permanent, long term solution for MTD.

There are some software providers for specifc sectors including education for example, who have yet to upgrade their software and obtain HMRC approval, and so have less than fve months (if not within the delayed exceptions) to do so.

To check if you are prepared for MTD please use our flowchart tool or get in contact with our VAT team on +44 (0)1635 35255