Nearly all VAT registered UK established businesses, with a taxable turnover above the VAT registration threshold (£85,000), now need to comply with MTD for VAT. HMRC has stated that one aim of MTD is to reduce the VAT lost through errors and mistakes arising from manual input.
The requirements for VAT registered organisations
- Keep VAT records digitally
- Create digital links between digital records
- Provide VAT return information to HMRC via an API (Application Programming Interface) through MTD software
HMRC has issued their guidance on this in the VAT Notice 700/22.
When to submit your first digital return
If you submit monthly returns, you must file the April 2019 return digitally. If you submit quarterly returns, you must file the first period beginning or after 1 April 2019 digitally - click here to see the full HMRC timelines.
However, HMRC highlighted the few types of business that were given deferment until October 2019. This included VAT divisions, VAT groups, public corporations and traders based overseas. If your organisation was given deferment, you would have received a letter from HMRC, but if you aren't sure we advise you to get in touch with HMRC.
A key part of the MTD regime is that the transfer and exchange of data between component parts of your ‘functional compatible software’ must be digital after the end of the soft landing period. This means that those mandated into MTD from 1 April 2019 need to ensure that all transfers or exchanges of data between software programs, products or applications is made via ‘digital link’. The deadline for digital links in software has now been extended from 1 April 2020 to 1 April 2021 due to COVID-19 - click here for more information.
Buzzacott's bridging solution
Firstly, we recommend that you check if your existing accounting software is compatible with MTD; most of the major accounting software providers, Xero, QuickBooks and Sage, are compatible and will provide the Application Programming Interface link. However, if your software isn’t compatible, don’t worry! We have designed a bridging solution that allows submission of your VAT returns directly to HMRC in a way that is compliant and hassle free.
We are on hand to assist you in your preparations for implementation by doing the following:
- An initial impact assessment to determine next steps
- Reviewing and transforming your VAT return process
- Preparing or submitting your VAT return
- Supporting your decision on minimal compliance with MTD
"Just a short note to say a massive thank you for the Making Tax Digital Solution, we’ve just submitted our first VAT return successfully today. It was straightforward to use and the user guide worked in taking us through step by step. Thank you to all involved in the design and support of it, you’ve made something I was concerned about very easy for us!"
Becky Morris, Financial Controller - Diocese of Oxford