MTD for VAT – update

Changes to MTD for VAT - what you need to know

HMRC has announced that a small number of VAT registered entities are to be allowed to defer complying with the requirements of Making VAT Digital (MVD) by six months.

Those being permitted to postpone entry into Making VAT Digital until 1 October 2019 are:

• Trusts
• 'Not for profit’ organisations that are not set up as a company,
• VAT divisions and VAT groups
• Public sector entities required to provide additional information on their VAT return - Government departments, NHS Trusts, local authorities
• Public Listed companies (PLCs)
• Traders based overseas
• Those required to make payments on account
• Annual accounting scheme users

HMRC deems all the above to be a VAT-registered business with complex reporting requirements but most of our clients are not in this list and so do not qualify for deferment.

So VAT registered clients who are trading above the £85,000 VAT registration threshold must, from 1 April 2019, submit VAT returns directly via 'functional compatible software'.

You will not be allowed to use HMRC's current online VAT service and key your return figures in directly. It may be that this will still be allowed for a short initial period but HMRC has not provided any details.

If you currently use a spreadsheet to calculate your VAT returns, you'll need to use bridging software to transmit your spreadsheet VAT entries to HMRC.  

If you use a spreadsheet to record raw data you will need to use a digital link from that to your accounting software.

Initially only the nine boxes of the VAT return will be submitted digitally but the longer term plan is that your software will 'talk' to HMRC and will then be used to submit all the transactional data as well.

There are some limited filing exemptions and exclusions available to those who are digitally excluded by reason of age, disability, location etc, but unfortunately you can't get exemption on the grounds of being 'digitally inept'.