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Newsletter issue - August 2018.
In response to calls for additional clarity from businesses and their representatives, HMRC have published further information on Making Tax Digital (MTD) to support them with preparation in the run up to the start of the mandatory MTD VAT service from April 2019.
The guidance includes:
- A new HMRC VAT Notice entitled Making Tax Digital for VAT (Notice 700/22). The Notice explains the digital records businesses must keep, and ways to record transactions digitally in certain circumstances; and what counts as 'functional compatible software', and when software programs do and do not need to be digitally linked where a combination of programs is used.
- A page on GOV.UK providing a list of software developers HMRC are currently working with during the MTD VAT pilot that have already demonstrated a prototype of their product ready to start testing with businesses and/or agents.
- A communications pack to provide stakeholders with information to support businesses and agents to prepare for MTD. The pack is intended to provide source material and information which can be used to support any letters, articles, presentations, social media activity, or web content planned by stakeholders.
As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 1 April 2019. Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.
Businesses above the VAT threshold are not required to use MTD for their VAT returns until April 2019 but HMRC have already started piloting the changes with small numbers of invited businesses and agents. This will be widened out to allow more to join later this year. In the meantime, businesses can start to prepare now by ensuring they are keeping their records digitally and in accordance with the rules set out in the Notice.
