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Making Tax Digital (MTD)

Making Tax Digital will come into effect from April 2019 and will impact all businesses who are over the VAT registration threshold.  The impacted businesses will be required to keep their records digitally and provide their VAT return to HMRC through MTD compatible software.

The government plans to make the necessary changes to the VAT regulations no later than April 2018 allowing software developers and businesses 12 months to prepare for the changes.   The regulations will provide that a business in scope for MTD must use functional compatible software to meet the new requirements which means a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software must include:

  • keeping records in a digital form as required by the regulations, this includes:
    • business name, principle place of business and VAT registration number - this ‘designatory data’ will also include information about which VAT accounting schemes they use
    • the VAT account that each VAT registered business must keep, by law - the VAT account is the link – the audit trail – between primary records and the VAT return
    • information about supplies made and received
  • preserving digital records in a digital form as required by the regulations
  • creating a VAT return from the digital records held in functional compatible software and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis
  • receiving information from HMRC via the API platform in relation to a relevant entity’s compliance with obligations under the regulations

For businesses using a scheme such as the flat rate scheme or retail scheme there may be different requirements to those stated above.  Exemptions from these requirements are available in certain circumstances.

https://www.gov.uk/government/consultations/making-tax-digital-reforms-affecting-businesses/making-tax-digital-for-vat-legislation-overview#annex1

For further information please contact Alison Birch below:

  • Seminars & Events
    Making Tax Digital for VAT Seminar Series

    To learn more about the Making Tax Digital for VAT legisation and the impact it could have on your business we would invite you to attend one of our free to attend breakfast seminar series.