If your business is VAT registered and turning over more than £85,000 a year it’s likely you’ll have heard of the Government’s new digital tax program: MTD – Making Tax Digital.
The first mandatory stage of MTD was rolled out on 1 April 2019 with many businesses making their first returns under it by 7 October 2019.
You can read more about the basic requirements of the scheme in our previous blog on MTD – but now the rules are in effect, what does your business need to do?
Signing up
If you haven’t signed up yet, there’s still time to do so.
Speak to us if you haven’t signed up, and we can do so on your behalf.
Keeping records
If you’re included in this first stage of MTD and you file VAT quarterly, you’ll be required to keep digital records from the start of your first VAT return period beginning on or after 1 April 2019.
These records include:
- your business details
- information on supplies made and received
- details of any VAT accounting schemes you use.
| First mandatory MTD for VAT return period | Keep digital accounting records from: |
| 1 April 2019 – 30 June 2019 | 1 April 2019 |
| 1 May 2019 – 31 July 2019 | 1 May 2019 |
| 1 June 2019 – 31 August 2019 | 1 June 2019 |
Digital VAT returns
The other requirement of MTD is to file VAT returns using compatible software which can exchange data with HMRC.
This could be separate software from the product used to keep your records but the data that is moved from one application to another must be transferred digitally.
| First mandatory MTD for VAT return period | First mandatory MTD for VAT return due |
| 1 April 2019 – 30 June 2019 | 7 August 2019 |
| 1 May 2019 – 31 July 2019 | 7 September 2019 |
| 1 June 2019 – 31 August 2019 | 7 October 2019 |
The Government confirmed at the Spring Statement 2019 that they are taking a “light-touch” approach to penalties in the first year.
While this means there’s less pressure to meet every requirement perfectly, you should still be making reasonable efforts to follow the new rules, as the soft approach only applies to businesses “doing their best to comply”.
Exemptions
Some businesses may be exempt from MTD for VAT, but the conditions for this are limited.
You may not have to follow MTD rules if:
- it’s not reasonably practicable because of age, disability, remoteness of location or any other reason
- you or your business are subject to an insolvency procedure
- your business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
A handful of businesses with more complex requirements have also been given a deferred MTD start date of 1 October 2019.
Contact us
We’re happy to answer any questions you have about the new rules and can help you choose and set up suitable software.
Get in touch for advice on VAT returns and record-keeping under MTD.
Dick Haffenden
