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NEWS
| Posted by: Prospectus

Making Tax Digital for VAT. Do you know about the change?

You may be aware that HMRC have made changes to the way they manage reporting with organisations, moving many services online. As part of this, Making Tax Digital (MTD) is a flagship project with the ambition that taxpayers will use MTD for all reporting with HMRC going forward. In light of this, they are introducing Making Tax Digital for VAT (MTDfV), the first part of the MTD project, from April next year.

What does this mean?

All UK VAT registered organisations (whether in the Public, Private or Beyond Profit sector) must be able to submit their VAT returns to HMRC digitally using functional compatible software from 1st April 2019.

MTDfV also introduces new VAT record keeping rules meaning all VAT return data must be digitally linked, so that transactions can be traced directly back to the source data.

What dates do you need to be aware of?

From 1st April 2019 - all organisations must use an Application Programming Interface (API) software to upload their returns and receive information from HMRC, a version of which is available directly from HMRC. Any other software must be approved by HMRC and be capable of taking the VAT data from your accounting system and, at the click of a button, uploading the data as a return to HMRC.

From 1st April 2020-21 - additional digital record keeping regulations will tighten meaning that all data from the VAT return must be digitally linked and easily traceable back through the accounting system to the source.

This is a big change for most organisations who are used to producing internal reconciliations and uploading the data manually to the Government Gateway. It is important for organisations to be prepared for this change, with the advice being that relevant plans should be in place by April 2019 to avoid penalties from HMRC.

For more information, please follow this link.