VAT and Making Tax Digital
From Shipshape | Uploaded 8th December 2017
HMRC’s Making Tax Digital (MTD) proposals have been partly deferred but it has been confirmed that it will go ahead for VAT with effect from April 2019.
What we know so far
Although the finer details have yet to be announced, we can confirm some of the key components:
- Only VAT-registered businesses with turnover in excess of the VAT registration threshold (currently £85,000) will need to comply with MTD. Businesses that are VAT-registered but have turnover below the registration threshold will be able to volunteer for MTD.
- Use of digital record-keeping will be compulsory, which means that manual record-keeping or the use of spreadsheet records will no longer be acceptable unless they are used to feed into a digital recordkeeping system.
- Digital record-keeping packages must be capable of uploading VAT return information to HMRC’s website. The current system that allows manual keying of the VAT return figures will be phased out.
- Regardless of Brexit the information to be provided will be the standard 9 box VAT return as currently configured.
Businesses will, in addition to the standard 9 box figures, be able to ‘volunteer’ to provide more detailed information. We don’t know what this detailed information will consist of but early indications are that it could be as detailed as line by line analysis. However, HMRC has said that a business that volunteers the extra information will be less likely to be inspected. Before the General Election it was announced that charities would be exempt from MTD, but there has been no confirmation since the revised timetable was revealed.