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Making Taxation Digital (MTD) – 2019 Update

08/02/2019

As reported in a previous HaesCooper blog post – Maxing Tax Digital – update, the MTD for VAT pilot is now open to sole traders and companies that are up to date with their VAT. Those VAT registered businesses with more complex VAT issues to include Trusts, Groups of companies, completers of annual returns and those that make payments on account, will be expected join MTD on or after 1st October 2019.

MTD for VAT will therefore be compulsory for most VAT-registered businesses with a turnover above £85,000 from 1st April 2019. The MTD for VAT pilot scheme has been available to a select group of businesses and their accountants since April last year but now most businesses with a VAT taxable turnover of at least £85,000 will be able to join. With a reported as many as 134,000 vat registered businesses in the South East of England ill-prepared for the new MTD for VAT rules, it is recommended that businesses in a position to engage with the pilot should do so now.

By joining the HMRC MTD pilot scheme you are able to train your relevant employees, test the system and then let HMRC know of any remaining teething problems prior to the proposed MTD for VAT start date of 1st April 2019.

New MTD Guidelines for Business Owners

To accommodate MTD, there are changes required to record keeping for the digital VAT Returns. Sales and purchases need to be recorded digitally but a retailer does not have to digitally record each individual sale, although they must digitally record their daily gross takings. Purchases must be digitally recorded showing the exclusive of VAT amount. Expenses that are not to be entered on the VAT Return do not have to be digitally recorded e.g. employee wages. Also, small items of expenditure may be excluded from individual digital recording if it can be shown that it is impossible or unduly onerous to make the digital record. HMRC have confirmed that this applies to employee expenses and these can be digitally recorded as to the total value and total input VAT.

For sales and purchases it is not acceptable under MTD to group invoices together based on sales receipts per statements or per purchase payments. This is strictly the case for VAT records pre MTD but in practice some cash accounting businesses have completed their VAT records on the totals for payments. This grouping of invoices/payments will not be acceptable record keeping by HMRC post MTD, in April 2019, for VAT.

How HaesCooper Can Help

The HaesCooper team strongly advise those VAT registered businesses with an annual turnover above £85,000 to start planning immediately so that you are able join the HMRC pilot scheme asap i.e. ahead of this coming 1st April.

We can help you find an appropriate MTD for VAT software provider, as we advise you join the HMRC MTD for VAT pilot scheme by enrolling now. Please get in contact with us for more information by calling the office on 01892 890099 or email – info@haescooper.com.