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Making Tax Digital (MTD) Update – May 2019

24/05/2019

Making Tax Digital – Latest News From HMRC

The HMRC’s announcements on the progress to Making Tax Digital (MTD) have been covered by HaesCooper’s previous blogs, which can be found here:

• Making Tax Digital: What you Need to Know
• MTD: The Continuing Saga
• Making Tax Digital: April 2019 Update

From the updates, it can be seen that the MTD for VAT (MTDfV) is mandatory for most VAT registered businesses from the 1st of April 2019. If you are a VAT registered business, there is still time to register for MTD – but time is running out as the sign-up deadline is near.

It’s imperative that VAT businesses process the VAT return for the VAT period beginning on or after the 1st April 2019 and file it digitally under MTDfV. A relatively small number of ‘special’ VAT businesses, (for example trusts, non-profit organisations etc), will be notified by HMRC that they do not have to file under MTDfV until the 1st of October 2019. 

All those VAT businesses that have filed and paid to HMRC their VAT due on their final non-MTDfV VAT Return should sign up for MTDfV as soon as possible. HMRC has said that it can take up to 7 days to process the MTDfV registration application. Those VAT businesses yet to file their final non-MTDfV VAT Return should sign up for MTDfV as soon as they have filed and paid to HMRC their VAT for their final non-MTDfV VAT Return.

A word of warning to those VAT businesses that pay their quarterly VAT bills by direct debit (DD) – HMRC have said that the sign up to MTDfV cannot take place in the five ‘working’ days after the filing of the final non-MTDfV return, or within the seven ‘working’ days before the filing date for the first MTDfV return.

For example:

If your first MTDfV return says for the quarter to 30 June 2019 with the normal filing date of 7 August 2019 – if the VAT is paid to HMRC via DD; the signing up for MTDfV cannot be made after 29 July 2019, as 7 working days needs to be allowed for HMRC to process your application.

Record-Keeping Update

The start date for the compliant recording keeping for MTDfV is from the start of your first VAT period that begins on or after the 1st of April 2019 and not the date you signed up to MTDfV with HMRC. Compliant record keeping will, in most cases, mean using a recognised MTDfV compliant software.

Our team at HaesCooper can help you to decide on the best MTDfV compliant software for your business – please contact us to discuss your requirements. For a business registered for VAT on or after 1 April 2019 then the MTDfV compliant records need to be kept from the date of the new VAT registration.

Additional Changes to the MTD Scheme

• The Government has announced that MTD for other taxes such as Income Tax will not happen before April 2021
• HMRC have said that there is no ‘soft landing’ for their penalties for the late payment of VAT. Avoid fines: sign up for MTDfV now.