Making Tax Digital for VAT deadline: What you need to know

What is Making Tax Digital for VAT?

It’s the first phase of HMRC’s Making Tax Digital (MTD) initiative which aims to create an accessible and transparent digitised tax system. From 1 April 2019 most VAT-registered UK businesses with a turnover above the VAT threshold will need to use HMRC’s Making Tax Digital service to keep records and submit VAT returns.

Making Tax Digital for VAT (MTDfV) is intended to make the system simpler. HMRC believes the move to digital will make tax admin more effective, more efficient, and easier for taxpayers to get right.

Is my business affected?

If your business’s taxable turnover is over the VAT threshold, then you’ll most likely need to take your records online before April 2019. Some business categories have been deferred until October 2019 due to more complex requirements, but most will have to go digital.

If your taxable VAT turnover falls below the threshold, you can still voluntarily join MTDfV, but you won’t be obligated to.

There are some exemptions to the MTD initiative including those that are “digitally excluded”. These categories include people who can’t use accounting software for religious reasons, or people with practical issues such as age, disability, or location.

Unsure about MTD? Our accounting services can help

Will this change my operations?

Your business will need to keep digital VAT records and send your returns using MTD-compatible software. You won’t need to keep any additional records, but they will need to be recorded digitally instead of on paper. For each supply, the records should include the time of supply (tax point), the value of the supply (net excluding VAT), and the rate of VAT charged. You should also be recording relevant business information such as the name, principal address, VAT registration number and details of any VAT accounting schemes you use.

If you’re not using accounting software, now is the time to get one that’s MTD-compatible and able to exchange data digitally with HMRC. If you are, you must check that it’s fully MTD-compatible. HMRC has published a list of VAT and tax software as well as a way to check if your current software is compatible, but it might be daunting to decide on the best path for your business to take.

There’s no reason to panic

Remember, it’s all about making tax simpler. What you need to do depends on the unique structure of your business and your current record keeping. It can range from new or upgraded accounting software to VAT record filing process changes. If your business is already using Sable International’s accounting services to process, calculate and complete your VAT returns then you’re already compliant.

A qualified accountant can be the difference between a scramble before deadline and a smooth transition to Making Tax Digital. Our accounting team is always up to date with HMRC and all relevant tax changes. Whether you’re looking to evaluate your software, ensure your processes are sound, or make sure your records are stored correctly, we’re ready to assist with any query.

Our small business accounting services can make your digital tax transition easy. Contact +44 (0) 20 7759 7553 or accounting@sableinternational.com for assistance.