Making Tax Digital for VAT: The time is now

Are you a VAT registered business coming to the end of your reporting quarter on 30 June 2019? If you have not yet made arrangements to file your VAT return via HMRC's Making Tax Digital system, the time to act is right now.

If your business is registered for VAT and turning over sales of more than £85,000 (the current VAT registration threshold) then from VAT periods beginning on or after 1 April 2019 you may no longer submit your VAT return via the existing government gateway system.

Instead you will need to submit this and future VAT returns via HMRC's new Making Tax Digital (MTD) system.

The deadline for submitting your first VAT return under the Making Tax Digital system is 7 August 2019 if you pay electronically or 31 July 2019 if you pay by non-electronic means.

If you already have an accountant and have not been made aware of the changes then contact him or her immediately to get advice on next steps. If you are considering getting help from a qualified adviser, an ICAEW chartered accountant will be able to guide you through though the Making Tax Digital registration and filing process.

What is Making Tax Digital for VAT?

Making Tax Digital is a mandatory filing and record keeping system that requires eligible businesses to file VAT returns using HMRC approved software via digital links to digitally kept records.

Voluntarily registered businesses ie those not making annual sales of over £85,000 are not required to comply with the Making Tax Digital for VAT system at present.

Signing up for Making Tax Digital

HMRC will not automatically sign up your business to the MTD for VAT system; each business needs to register individually or arrange for an agent to do this on their behalf. A business can use its existing government gateway details or create a new government gateway ID specifically to file VAT returns via the MTD system.

Digital records

Individual records of each transaction supporting the VAT return will need to be kept digitally which means in either an MTD compliant book-keeping software, Excel spreadsheets or 'API enabled' spreadsheets.

File via Making Tax Digital compliant software

VAT returns must be filed using MTD compliant software. Spreadsheets can be used in a prescribed format and linked to 'bridging software'. Details of HMRC's approved list of software providers can be found here. An agent, often an accountant, can do this on your behalf.

Is my business exempt?

Some businesses are exempt from using the MTD system or may be eligible for delay until 1 October 2019 before adoption of the new filing regime.

In order to qualify for an exemption or deferral you or your agent will need to contact HMRC to verify the status of your organisation. Check with your accountant or adviser to see if your business falls into any of these categories.

Penalties

HMRC may charge penalties for non-compliance with the new filing regime or late payment of VAT.

For more advice or information on record keeping, Making Tax Digital or general business advice, book a free consultation with an ICAEW chartered accountant on Enterprise Nation here or at www.icaew.com/faca.