Making Tax Digital “and all VAT”
The current VAT registration threshold is £85,000. If your business turnover is over the VAT threshold, and you are VAT registered, there are big changes just round the corner.
These changes affect all VAT returns that commence on or after 1 April 2019.
For those, you will not be able to send your VAT details online using the current HMRC Gateway, because this facility will be removed. At the moment, over 90% of businesses use this method.
You will need to submit those tax returns using new software to comply with HMRC plans for Making Tax Digital or “MTD”. Commercial software companies are now working on this. They will be offering packages-some of which will integrate with their existing software that they already supply for book keeping and accounting.
At Maven we can help you to decide which software supplier you choose so that you can either submit your own VAT returns or engage someone else to do it instead. You can also consider with us how it will work in practice, especially if you use a paper record system.
What about spreadsheets? At present no software author has found a way to do a conversion digitally as required by HMRC. There is nothing to stop a business from supplying their VAT agent with a spreadsheet of the transactions, but these transactions then have to be recorded again digitally by their agent as part of the “VAT account”.
In due course HMRC will require to have online all the underlying transactions, for that reason we are suggesting that businesses consider moving away from spreadsheets. This will avoid duplication of work, or the real possibility that spreadsheets conversion may simply not work.
It is important to note that:
- If your turnover is below registration threshold but you are voluntarily making VAT returns, this does not apply to you
- If you do need to join MTD, you can’t opt out later if your turnover goes below the threshold, unless you deregister
- MTD will not affect those people that use the VAT retail scheme or flat rate scheme etc.
- Businesses will report their VAT information using the same deadlines and for the same VAT periods as at present
- For now, the data provided to HMRC will be exactly the same as the totals currently submitted on the VAT return
- No additional information to support those totals online will be required
VAT MTD is undeniably the trial to see how and when HMRC should introduce the rest of Making Tax Digital for other taxes paid by individuals, partnerships and companies.
The earliest date for the rest of MTD will be April 2020 depending on how well the VAT project succeeds.
What about getting VAT Registered?
If you are getting close to the VAT threshold for registration we can help you with deciding when or if you need to register for VAT.
We can also advise you on de-registration for VAT if your circumstances allow.
