Making tax digital for VAT is fast approaching its full rollout. There has been a lot of talk on the subject but with so many changes and updates it’s easy to get lost. Given that it has come from the original idea of doing away with the personal tax return it’s reasonable to ask ‘How did we end up here’.....and where is here?

If you are VAT registered what does MTD for VAT mean to you?

When will it come into effect?

As things currently stand VAT registered businesses, with a turnover above the VAT registration threshold of £85,000, will need to be MTD compliant with their first return period commencing after April 1st 2019. Return periods commencing before April 1st 2019 can be recorded and filed under the current requirements.

If you are VAT registered but your turnover is below the VAT registration threshold of £85,000 will you need to file your returns under MTD? No. For many this will be great news. Just be careful to watch for it to change in the future. The rules might change to included all VAT registered businesses or your turnover may go over the registration threshold in which case you would need to start filing under MTD.

As mentioned above it will come into effect for VAT periods commencing on or after 1st April 2019. For most this will mean the earliest they have to be ready to file a return through MTD is from July 1st 2019.....although it would be wise to be prepared well before that date. Software needs to be installed, checked and government gateway details will be required.

Now what about the actual records? These will need to be kept in digital format. If you plan to use an accounting software package now is the time to speak with your provider to make sure it will comply with MTD. Another option is to use a spreadsheet. In either case it’s essential that key details from invoices and receipts are included in the digital record, the supporting documents themselves do not need to be kept electronically.

For spreadsheet users it’s likely you will need an add-on to perform the filing process and receive communications from HM Revenue & Customs. It’s worth investigating a few of these to find your best fit, some are even free.

If you would like assistance in setting up your record keeping systems to be MTD ready or would like ongoing support with VAT please give me a call or send a message.