Despite there being teething problems with some of the public testing HMRC has carried out so far, the rollout for all VAT registered businesses with a turnover above £85,000 will proceed from 1 April 2019 as planned.
To date, communication from H M Revenue & Customs has been minimal, as has any detail supporting the Making Tax Digital rules. And when HMRC has released any information it has often been unclear.
So what has changed?
In short, the VAT rules remain unchanged except for the requirement to maintain digital accounting records and submit the return data via software.
Record keeping changes under MTD for VAT
Traders must keep a digital record of:
• Their business name
• The address of their principal place of business
• Their VAT registration number
• Any VAT accounting schemes used
Each supply must record:
• Time of supply (the tax point)
• Value of the supply made (net of VAT)
• Rate of VAT charged
For each supply received:
• Rate of supply
• Value of supply
• Amount of input tax that will be claimed
There are different rules for record keeping for cash businesses and slightly relaxed rules applied over the first 12 months. Detailed guidance can be found within HMRC’s VAT notice 700/22.
If you do not think you are ready…
Buying software alone is only part of the solution and changing the record keeping system may not be as onerous as you think. So please speak with us to discuss how to minimise the impact on your business.
We have also created a ‘Countdown to MTD flowchart’ to assist with the registration process and the options available to you.
If you think you are ready…
Where software is already in use this does not necessarily mean that you are MTD compliant.
Traders need to ensure that they have both registered the business for MTD and authorised the software to submit MTD returns.
A more detailed explanation of the MTD signup process is contained in a separate article within our March blog. Please note that the timing is crucial and the warnings given in our February blog article should be heeded.