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Making Tax Digital – What You Need to Know

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Making Tax Digital (MTD) for VAT is the Government’s first phase in what they believe is making tax administration more effective, efficient and easier for taxpayers.

Will it affect me?

If you are a VAT registered business with an annual turnover above the VAT threshold (currently £85,000), you will be required to keep digital records and submit VAT returns using MTD-compatible software from 1 April 2019.

The digital records, which need to be kept for at least six years, must include:

– The business name, place of business and VAT number
– The VAT account including the audit trail from the primary records to the VAT return
– Details on supplies made and received

My VAT return straddles the 1 April 2019 – how to I comply?

If your VAT quarter does not start on 1 April 2019, then the first VAT return beginning after 1 April will be the first return you need to be MTD compliant. So for example  if your VAT quarter ends on 30 April, then from 1 May 2019 onwards, your VAT returns must comply with MTD.

Will the deadlines for submissions and filings be changing too?

The deadlines for filing the VAT return and payment of VAT due will be exactly the same as they are now, they will not be changing.

Will my current spreadsheet count as a digital record?

Spreadsheets will not be classed as a digital record for MTD purposes unless they can be connected to an Application Programming Interface (API) via a bridging link to enable the transmission of information to HMRC. Specific software will be needed to submit the relevant information to HMRC.

I am VAT registered but my turnover is below compulsory registration limit, what should I do?

If your turnover is below the VAT threshold you may voluntarily join MTD for VAT if you wish, but it will not be compulsory to do. If your turnover was over the threshold and you are subscribed to MTD for VAT once 1 April 2019 passes, and it then subsequently drops below the threshold you must remain MTD compliant until you deregister from VAT.

Future plans for MTD

The Government’s plan is to role MTD out across all aspects of tax but as and when dates for compliance are announced, we will be sure to keep you informed.

How we can help

In due course MTD will impact all businesses. As accountants we are proactively ensuring we are ahead of the changes to give you the best possible advice at all times. We’re here to help you with whatever the future brings for your business so if you need any further information, please free feel to contact us.

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