It’s a little scary that my last column on MTD-VAT was just over a year ago – how time flies when you are having fun?! OK, I will accept that only an accountant could put ‘fun’ and ‘VAT’ into the same sentence! But the fact is, it is here and if you are a VAT registered business trading above the VAT registration threshold of £85,000 – hopefully you are already doing something about it!
For those of you still getting to grips with it all, here is a quick rundown:
The first mandatory period for MTD-VAT for most entities is for VAT returns periods beginning on or after 1 April 2019. Some with more complex affairs such as VAT groups, trusts, and users of the annual accounting scheme (amongst others) are deferred to 1 October 2019.
From the start of that VAT return period, the entity must keep compliant digital records and submit their VAT returns to HMRC using API enabled software, not the existing web portal.
Spreadsheets can be used with bridging software, but all links between the spreadsheet and the software must be digital, as should all links between multiple software systems if, for example, you run separate ‘front of house’ or stock systems and accounting systems.
All entities will need to register for MTD-VAT through their HMRC Online account and this process can take up to three days to complete. Once registered, all future VAT returns must be submitted using the new system. The key point here is not to register before submitting your last VAT return which falls outside of the MTD requirements, else it too will need to be submitted through software.
Care must also be taken if you pay your VAT by Direct Debit as on registration the old mandate will be cancelled and a new one set up. You must therefore register after the previous return’s DD is collected and you must be registered at least 7 working days before you submit your first MTD VAT return.
HMRC’s helplines are expected to be exceedingly busy during this time, so my advice is not to leave it to the last minute!
This article originally appeared in the June/July edition of Wiltshire Business.