The stage is still set for Making Tax Digital (MTD) for VAT to be rolled out on 1 April. But according to the Institute of Chartered Accountants in England and Wales, 40% of relevant businesses aren’t aware they are about to be affected.
Despite calls from the House of Lords at the end of last year to postpone MTD, there appears to be no stopping this significant change going forward. The first wave of implementation requires all VAT-registered businesses with turnover above the £85,000 VAT threshold to file and pay VAT online through specific software interfaces, as well as keep digital records.
The pilot programme was expanded in October to cover around 500,000 businesses and you can still join it. HMRC is still issuing guidance and clarification, so it’s important that you know where you are in your preparations.
Businesses that are eligible for MTD for VAT should now be working through the developments necessary to be able to comply. Depending on how you have been managing your accounting, you may need to change in one of the following ways:
- Move from paper-based records to digital MTD.
- Move from spreadsheets to filing with MTD via bridging software.
- Move from spreadsheets to full MTD-enabled software.
- Work with your existing software as it becomes MTD compatible.
We can work with you to help you plan the best way forward. If you will be submitting your VAT returns yourself, a growing list of software providers is on the HMRC website. You can also check that your existing software supplier is already included or planning upgrades.
It may take time to settle into the best solution. But even if you are not immediately affected by the 1 April change for VAT, there are other deadlines on the horizon. Certain other VAT registered businesses will need to start filing under MTD from October 2019, and from April 2020, MTD is scheduled to be implemented for income and corporation taxes. All VAT registered businesses may also end up coming under MTD, regardless of turnover.
If you are in the first wave of businesses required to move to MTD for VAT on 1 April, you need to ensure that you are ready. Get in touch if you need to discuss your MTD preparations on 0114 266 4432 or [email protected].