MTD - A great Opportunity
April 2018
Making Tax Digital for VAT will be a major change for those of you currently using the HMRC website to file your VAT returns but it is also a great opportunity to get to grips with your VAT processes in the run up to the new regime. This email is the first of a series of updates we will be providing for clients and contacts to keep you informed of the progress of our discussions with HMRC and how the MTD project will impact you.
First, a quick summary:
- Making Tax Digital for VAT will be mandatory for most VAT Registrations from 1 April 2019. At this point, HMRC will remove the option to file returns on their website, so you need to be thinking about this now;
- MTD requires that all VAT records are stored electronically and there are no manual or "copy and paste" elements in the VAT return preparation process;
- Having said this, HMRC have confirmed that Excel is still a valid part of any MTD compliant process, as they acknowledge the complexity inherent in many large businesses;
- You will need to purchase (or develop in-house) MTD compliant software to file your VAT returns.
We are working closely with HMRC and our clients to manage a smooth transition to MTD and to ensure that our VAT Controller software is fully compliant. As a tax software developer we gain a unique insight into the progress of HMRC projects and where appropriate will share these insights with you.
Our current observations on MTD are:
-
With only a few weeks to go before the pilot is due to start, there is still an element of system design being undertaken by HMRC and the specification is changing on a regular basis;
- We are currently advising our clients not to enrol in the pilot as only a small sub-set of returns can be filed initially. Also, HMRC's roll out plans for extending the pilot service remain unclear;
- At present we have a number of outstanding queries with HMRC on the treatment of monthly returns, final returns, annual adjustments, ECSL returns, payments on account and overall platform stability and usability. Whilst we believe that these will be resolved in due course, we are wary of the potential risks and consider the project to still be in its infancy;
- Those companies wishing to enrol in the pilot can still do so soon and you may well already have been contacted by HMRC to invite you to join. Remember, you will need a software partner to assist with accessing the new HMRC VAT "API" (Application Programming Interface).
We are also in regular contact with industry groups and professional bodies to make our views on the progress of MTD known. We will continue to send updates but you are free to opt-out at any time. After May 2018 when the GDPR rules come into force, we will be amending our mailshot policy but will give you plenty of opportunity to opt-in well in advance if you want to continue receiving these updates.
Keep an eye out for our next update which will concentrate on what data you need to store as part of the VAT account and how this can be incorporated into an MTD compliant system.
Do please let us know if you have any queries on MTD or any of your automation needs by contacting Bryony Clinton at Tax Automation Limited on 0118 935 7140 or email at bryony.clinton@taxautomation.co.uk.