Last call, are you ready for revised digital filing of your VAT returns?
Most VAT registered businesses with a turnover above the VAT threshold need to be ready to keep digital records for VAT purposes, and to file their VAT returns, as required by the new Making Tax Digital (MTD) rules.
What does this mean?
For VAT return periods starting on or after 1 April 2019, businesses with a turnover above the VAT threshold (currently £85,000) have to:
- keep their records digitally (for VAT purposes only), and
- provide their VAT return information to HMRC through MTD functional compatible software.
Businesses need to sign up for MTD for VAT in order to submit VAT returns digitally. HMRC has confirmed that businesses that pay VAT by Direct Debit cannot sign up in the 7 working days leading up to, or the 5 working days after sending a VAT Return.
HMRC has also confirmed that during the first year of the changes that they will take a light-touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law. HMRC is clear that this does not mean a blanket ‘no penalties promise’ and businesses need to be aware to do all they possibly can to meet the MTD requirements.
But I am exempt from online filing
Any businesses that are currently exempt from online filing of VAT will remain so under MTD. There are also provisions for those who cannot adapt to the new service due to age, disability, location or religion to apply for an exemption.
There is also a deferral group for certain entities that have until the first VAT Return period starting on or after 1 October 2019 to start using MTD for VAT. This includes businesses that are part of a VAT group or VAT division, use the annual accounting scheme or that make payments on account. If your business has a turnover under the VAT registration threshold, you are not currently mandated to use the MTD for VAT service but can opt to do so if you wish.
If you are uncertain how to proceed, either to register for MTD filing, find appropriate software or deal with any other aspect of MTD for VAT, please call asap as we are running out of time to keep you compliant.
For more information, Book a Free Consultation