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My business uses software but it is an old version…

Although your business is compliant with keeping records digitally, you will need to be able to calculate and submit VAT returns through compatible software.  If your current provider offers compatible software you may want to consider upgrading your software to the latest version or move to an alternative provider that offers compatible software, such as Xero who we work with extensively.

For businesses yet to be caught by MTD for VAT, they may wish to consider introducing software at the start of their accounting year before entering MTD to reduce disruption to the business.

Click here for further information about Xero.

As part of any upgrade or software change, it is important to undertake a review of your VAT return preparation process to ensure that your current process is compliant with the new rules and your VAT codes are used correctly.  For example, a common error identified is exempt transactions being coded as either outside the scope or zero-rated rather than exempt.

Under the new rules businesses must have a record of output values per period split between standard rate, reduced rate, zero-rate, exempt and outside the scope, and therefore coding errors like this will mean you are not compliant with the new rules.

We also see confusion over the correct codes to use for transactions with suppliers and customers outside the UK.  Additionally, only certain manual adjustments are permitted under the new rules and therefore if your VAT return preparation process involves manual work you may need to configure your accounting software differently to automate some of this process.

Our specialist VAT team is happy to help with this.