MTD UPDATE – 5 MONTHS TO GO
Our information event on 17 October was well attended by clients and provided a useful guide on MTD. The MTD pilot started on 16 October so get going!
If you are not sure what to do get in touch with us and find out! MTD is happening so get ready.
From 1 April 2019 making tax digital (MTD) will operate for VAT. VAT registered businesses whose turnover exceeds the VAT threshold (currently this is £85,000) must start to file their VAT returns within MTD regulations and their first MTD return will be for the VAT return which starts after 1 April 2019. For example if a VAT quarter ends 30 April 2019 can be filed following current procedures and regulations but the next VAT quarter ending 31 July 2019 must be filed using MTD procedures.
Businesses who have voluntarily registered for VAT but their turnover has never exceeded the threshold do not have to follow MTD regulations but they can follow MTD regulations if they wish. The most important action is to be vigilant in comparing the past 12 months turnover to the threshold. If it exceeds the threshold MTD for VAT must be followed.
Some Businesses are exempt in any event – there are three categories –
Some Businesses will find MTD more of a challenge than others and a soft landing has been included in the MTD regulations so that these businesses do not have to comply until the firs VAT quarter starting after 1 April 2020.
What does MTD for VAT mean – MTD means that VAT returns will have to be filed using API software. API stands for “ Application programming interface”. An API provides the digital link between the final digital record of your VAT return and HMRC to receive the VAT return in a digital format. Filing via the HMRC VAT service is not permissible.
Software developers are working to provide a lot of choice for businesses and we are assessing some of these through our bookkeeping department who are running some of these new programs for clients who use our bookkeeping service. This has helped us understand what is in the marketplace.
Many businesses use spreadsheets and this can continue but digital links between the spreadsheet or spreadsheets are critical. Digital links sound complicated but anyone preparing spreadsheets will be familiar with macros for calculations and tools such as CSV and XML copies – these are sufficient digital links. The process is:
Spreadsheet – digital link – API program – HMRC
If you are uncertain how to proceed please do not ignore this change. Why not contact us? We can help you.
The regulations are contained within VAT Notice 700/22. Read this latest guide updated in July.
Whatever you do make sure you act as soon as you can.