A fundamental change to the way that businesses submit UK VAT returns is coming, with the introduction of the Making Tax Digital (MTD) for VAT programme scheduled for April 2019. All businesses with turnover above the UK VAT registration threshold, including businesses belonging overseas, should start preparing now, to ensure that they are able to fully comply with the new rules.
What is MTD for VAT?
MTD is a key part of HM Revenue and Customs’ (HMRC) plan to become a world leading digital tax authority. All businesses with a taxable turnover above the VAT registration threshold (currently £85,000 per annum) will be required to comply with the MTD rules. This includes overseas businesses making taxable supplies in the UK. Businesses with turnover below the threshold can opt to use the MTD rules. A business within the scope of MTD must use ‘functional compatible software’ to meet the new requirements. These new requirements are essentially to:
- Maintain digital business records
- File relevant VAT information electronically
VAT records will need to include a much wider range of information than currently required. MTD will also include a facility to submit supplementary data to HMRC. For example, additional information in support of a VAT repayment return. The expectation is that this access to data will allow HMRC to interrogate information directly and enable them to process VAT refunds and other queries quicker and more efficiently. What ‘functional compatible software’ will look like and what functionality it will have is still unclear.
Click here to learn more.
