Making Tax Digital for VAT has been saved
Making Tax Digital for VAT
MTDfV (Making Tax Digital for VAT) is a HMRC initiative which will ultimately require UK taxpayers to move to a fully digital tax system. Businesses with UK VAT registrations will be required to keep digital records for VAT purposes and provide their VAT returns to HMRC using compatible software from 1 April 2019.
There are three key digital components to MTDfV:
1. Digital submission – April 2019
At present, most businesses submit their UK VAT returns through manually re-keying into HMRC’s online portal. In line with the move towards digital, the online portal will close from April 2019 and taxpayers will no longer be able to submit UK VAT returns this way. Instead, all submissions must be done digitally via HMRC’s Making Tax Digital API.
2. Digital records
Although this does not mean businesses will have to store each invoice and receipt digitally, the transaction data will need to be stored digitally. This includes an AP and AR transactional listing and a digital VAT account from which the UK VAT return is prepared.
3. Digital links
VAT returns must have digital links to digital records – spreadsheets can remain, but they will need ‘digital links’ to source systems. HMRC has announced a soft landing period 12 months, however digital links will be mandatory from April 2020.
Depending on your existing tax and financial systems and processes, the switch to MTD for UK VAT purposes may be relatively straightforward, using an appropriate software provider where you can link in existing data extracts. Alternatively, you may see this as a chance to transform the processes enabling your VAT return production and submission.
Deloitte have developed a HMRC approved API solution which is a simple way to manage and submit UK VAT return filings without the need to install any software.
Contact us now for more information.