Latest Updates on Making Tax Digital for VAT

How to prepare for digital tax
Making Tax Digital (MTD) is quickly approaching. The system, which is designed to make tax more efficient has seen many timeline changes and will affect all businesses in the UK once fully implemented.

The next big milestone on the journey to a digital tax system comes in April 2019. From this date, businesses with a taxable turnover of above £85,000 will need to keep VAT records digitally and file their returns using software that’s compatible with MTD; this will impact around 1 million businesses in the UK.

On the 16th October 2018, HMRC launched a private pilot, inviting around 500,000 businesses to try the new online VAT service.

Find out more about the pilot scheme, the latest updates to MTD in regards to VAT and how you can ensure you are prepared if your business will be required to fulfil MTD obligations from April 2019.

Who’s Eligible for the Pilot?

Initially launching on a small scale in April 2018, the pilot is now open to both sole traders and companies that are up to date with their VAT, with the exception of those who:

  • Are part of a VAT group or VAT division.
  • Trade with the EU.
  • Are based overseas.
  • Submit annually.
  • Make payments on account.
  • Use the VAT Flat Rate Scheme.
  • Are newly registered for VAT.
  • Are unable to join at this point.

Companies looking to start using the pilot right away will need to be trading above the £85,000 VAT registration threshold and this should apply to VAT returns due from 1st April 2019.

Any company or sole trader using the new scheme will stop using the HMRC VAT portal and instead start submitting VAT returns via new MTD compatible software, which then submits the relevant data for you to HMRC.

The pilot is in place to ensure the software functions as it’s expected to and produces the correct outcomes for taxpayers and HMRC alike. The eligibility system is in place to ensure any businesses or sole traders with more complicated arrangements are not thrown in at the deep end and have adequate time to prepare.

MTD for VAT – Ensure You Are Prepared

If you’re a business that will be required to fulfil MTD obligations in regards to VAT from April 2019, you should begin preparing now if you haven’t already. HMRC does not have its own software, so you’ll need to ensure that you or your accountant uses HMRC approved software that’s compatible with the MTD system.

VAT for MTD Timeline

Here are the latest anticipated timeframes for Making Tax Digital in regards to VAT:

October 2018 – Pilot opened to a small number of sole traders and companies provided they met certain criteria as detailed above.

Late 2018 – Private testing to begin with partnerships, customers that trade with the EU and users of the VAT Flat Rate Scheme.

Late 2018 / 2019 – Pilot open to sole traders and companies who are not up to date with VAT and businesses who are newly registered for VAT.

Early 2019 – Pilot open to partnerships and customers that trade with EU.

1st April 2019 – Making Tax Digital mandated for all customers with the exception of those that have been deferred.

Spring 2019 – Pilot opens for customers that have been deferred.

October 2019 – Making Tax Digital mandated for all customers that have been deferred.

Download MTD for VAT timeline

MTD Experts Bristol

If you’re a business that will be obliged to fulfil MTD obligations in regards to VAT, you must ensure you have appropriate software in place to adhere to legislation from the relevant dates outlined in the above timetable.

At FCF, we use HMRC approved software packages for MTD for VAT and have the skills and expertise to ensure a seamless transition into the new tax system for your business.

For more information or to book a free no-obligation consultation, give one of our expert team a call today on 0117 379 0810.

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Steph

Steph is a Chartered Accountant with many years’ experience working in audit compliance and general accountancy. She is a Fellow of the ICAEW and has extensive knowledge of accountancy and tax for the self employed.
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