Making Tax Digital for VAT
From 1 April 2019, if your taxable turnover is above the VAT registration threshold you must adhere to the Making Tax Digital rules, set out below. If your taxable turnover subsequently falls below the threshold you will need to continue to follow the Making Tax Digital rules unless you de-register from VAT, or meet other exemption criteria. The Making Tax Digital rules apply to you from your first VAT period starting on, or after 1 April 2019. All VAT quarters will remain the same for our existing clients and we will not require any additional information from you.
Only businesses with a taxable turnover that has never exceeded the VAT registration threshold (currently £85,000) from 1st April 2019, will be exempt from Making Tax Digital. You will therefore need to keep an eye on your taxable turnover, especially if you think it is close to the VAT registration threshold.
Other exemptions include:
- Your business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers)
- It is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reason of age, disability, remoteness of location etc
- You are subject to an insolvency procedure
How Do I Submit My Return?
In order to submit your return via the new procedures, you will need to use compatible software, or an API enabled spreadsheet. More information regarding this can be found by clicking here.
HMRC will allow a period of time (‘the soft-landing period’) for businesses to have in place digital links between all parts of their functional compatible software.
We are pleased to advise that both SAGE and Xero are both fully compatible with the Making Tax Digital process and if you require any assistance moving over to either software, we’re here to help.
HMRC recognises that there may be points during the preparation of your VAT Return when calculations will have to be made outside of any software you use to keep the digital records, or there may be a need to enter data into your software from particular sources. For example, a capital goods scheme adjustment calculation done in a separate spreadsheet may need some form of input by hand into the software that will send your VAT.
Can I ask my bookkeeper to file for me, even though I usually file my own?
Yes, of course! We’d be happy to assist with your VAT Returns and we’re all geared up and ready to go! You may authorise HMRC to receive data from (and send data to) us on your behalf, in relation to any Making Tax Digital service. Once you have done this, we can sign up your business to that service, and use software to create, view, edit and send your data to HMRC. We may also keep and maintain digital records on your behalf. If you have previously authorised HMRC to receive your VAT Return from us, we can still do this. We won’t need to be re-authorised by our clients to act for them in the Making Tax Digital VAT service where we already have existing authorisation to act for VAT purposes.
So if you’re still baffled by the Making Tax Digital rules, don’t worry, you have plenty of time to ensure you’re compliant and most importantly we are here to help take the stress out of this for you, so just pick up the phone and give us call.