Making Tax Digital for VAT (MTD) came into force on 1 April. If you have not taken any steps to check the requirements and determine what needs to be done, there is still time, because unless you are on monthly returns the earliest VAT returns affected will be due in August this year, but we would strongly recommend taking action now.
If your charity is VAT registered and makes taxable supplies above the VAT registration threshold of £85,000 in any 12 month period , MTD will apply. There is a six month deferral from 1 April until 1 October for a small number of more complex businesses, and those registered in VAT groups but unless you have a deferral letter from HMRC your start date is 1 April.
For businesses submitting VAT returns on ‘calendar year’ quarters, the first VAT return affected will be due for filing in early August 2019. Therefore, for many charities affected by MTD, there is still time to investigate software options for complying with MTD.. It may be the case that you can update your existing accounting software or, alternatively, purchase ‘bridging software’. Buzzacott have bridging software available for a nominal fee which allows VAT return information to be submitted to HRMC using a spreadsheet. Talk you your usual Buzzacott contact or complete the form below.
Simplification for charities
HMRC have added a new section to the Making Tax Digital VAT Notice, relaxing the requirement for charities to use digital links when reporting on fundraising events. Often these events are run by volunteers and with limited internet/computer access, making it impractical to maintain digital links between the individual supplies that would need to be recorded separately in digital records. Therefore, HMRC will accept that charities can record all supplies made at fundraising events run by volunteers as if they were a single invoice in digital records, and similarly all supplies received at the event can be treated in the same way. This concession does not apply to events run by staff.
View the full version of the updated VAT Notice 700/22: Making Tax Digital for VAT here.