Making Tax Digital (MTD) is the Government initiative to improve the effectiveness and efficiency of the UK tax system and reduce its complexity.
From April 2019, all VAT registered businesses with a turnover above the VAT registration threshold of GBP 85,000 will be required to keep digital records for VAT purposes and submit their VAT return to HMRC using compatible software.
Businesses will need to keep the following information as digital records:
· Business name, principle place of business and VAT registration number (to also include the VAT accounting scheme used by the business)
· The VAT account showing the audit trail between primary records and the VAT return
· Details about supplies made and received
The information contained with the VAT return will be generated by pulling information from the digital records. Any existing arrangements where the summary information is supplied to HMRC using a simple on-line form will no longer be accepted.
Those businesses that are not required to begin keeping digital records for VAT from April 2019 will still be able to participate on a voluntary basis.
Companies will also be able to submit VAT data on a more frequent basis than mandated, which could be used to notify HMRC of a change in the circumstances.
Businesses are likely to face additional costs to transition to the MTD scheme, which include the time spent implementing new software for compliance with MTD, accountancy or agents’ costs to support the MTD move and training staff in the MTD process.
EBS is already offering VAT compliance service to its customers using MTD compatible software. If you wish to discuss how your business should prepare to this new initiative, please contact our Financial Controller Lorna for more information on firstname.lastname@example.org or call us on +44 1926 21 77 00.