MAKING TAX DIGITAL FOR VAT

MAKING TAX DIGITAL FOR VAT

Despite being legally mandatory for most registered businesses, the latest studies show that a huge number of businesses have still not signed up for the new government initiative. If you still haven’t signed up for MTD, what are the correct steps you should be taking?

We are London Bookkeepers and offer a London bookkeeping service which accounts for all aspects of Making Tax Digital for vat. As bookkeepers for Central London based in Kensington and Quickbooks specialists we regular update our knowledge and expertise in respect of all aspects of Making Tax Digital.

Start Date. Making Tax Digital for VAT sets new standards for keeping accounting records, as well as a new method for sending returns to HMRC for most VAT-Registered businesses. Please see the table below to better understand the start dates for each accounting period.

FIRST MTD VAT PERIOD YOU MUST KEEP DIGITAL RECORDS FROM FIRST COMPULSORY MTD VAT RETURN DEADLINE IF YOU PAY ELECTRONICALLY
1st April – 30th June 2019 1st April 2019 7th August 2019
1st May – 31st July 2019 1st May 2019 7th September 2019
1st June – 31st August 2019 1st June 2019 7th October 2019
MTD VAT requirements at a glance

From the 1 of April 2019, businesses in MTD for VAT will be required to maintain their accounting records digitally in a software product or spreadsheet. In addition, they will have to submit their VAT returns to HMRC using MTD compliant software via a digital link. There are still no requirements to digitalise the source documents e.g. the receipt or supplier invoice.

Despite the advancements in technology, HMRC will not be able to access more information than they already do today. The underlying VAT rules are also not changing, neither is the required amount of information submitted to HMRC or the current filling and payment deadlines.

Who does it apply to?

MTD will apply to all businesses that are VAT registered and annually turnover over £85,000. Businesses that are VAT registered but have a turnover of less than £85,000 can continue to use the uk.gov website and manually enter the nine VAT boxes. Alternatively, they can willingly volunteer to join the Making Tax Digital Initiative.

Businesses can determine whether they meet the turnover test by looking back at the previous 12 months from the end of a VAT period and include standard, reduced rate and zero-rated supplies but exclude exempt supplies. It is worth noting that businesses in the MTD regime will remain in even if their turnover falls below £85,000 per annum.

Who is exempt?

If you are VAT registered and over the turnover limit then you can only be exempted on a) religious grounds, in very special circumstances or  if b) if you are digitally excluded which means those for whom it is not reasonably practicable to keep electronic records or make a return under Making Tax Digital because of age, disability or remoteness of location.

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