With a little under six months left until the launch of Making Tax Digital for VAT (MTDfV), HM Revenue & Customs (HMRC) has finally begun to share information, about the new regime, with businesses.
Accountants and professional advisers, up and down the country, have been working hard to make their clients aware of the new digital system for the past two years.
However, up to this point, the nations official tax authority has remained relatively quiet on what has been described as one of the biggest changes to taxation in the last 70 years.
In mid-September, HMRC finally began to openly communicate with businesses, initially posting a tweet providing a link to a new webpage entitled ‘Making Tax Digital: How VAT businesses and other VAT entities can get ready.’
Welcomed by many, as a step in the right direction, the new webpage does not contain any new information but instead simplifies the information and guidance that is already available to businesses, in a bid to help them prepare. Details published on the page include:
- the background to MTD;
- important facts about the regime;
- the advantages of digital record keeping; and
Despite this, however, research published by the Institute of Chartered Accountants in England and Wales (ICAEW) shows that over 40 per cent of businesses that will be affected by MTD for VAT are still not aware of it.
This means there is still a way to go before the deficit in knowledge is eliminated entirely and for those who haven’t even begun to think about their obligations under MTD, time is running out.
According to AccountingWEB, HMRC has revealed that it intends to continue increasing its social media and public relations activity surrounding MTD, as well as contacting those businesses which are directly affected via post.
HMRC also confirmed that it will publish details of the compliant VAT reporting products later this year, when the private pilot, which is currently ongoing, becomes public.
However, a list of software companies who are already working with HMRC is available here.
Don’t delay your preparations…
Initially MTDfV will apply, from 1 April 2019, to most VAT-registered businesses and landlords whose turnover exceeds the VAT threshold (currently £85,000). These businesses will be expected to keep digital records and report VAT quarterly to HMRC, using HMRC-compliant accounting software.
You may already submit your VAT return online, but this does not mean that you are automatically MTD-compliant.
After 1 April 2019, the current HMRC portal will be closed to many businesses and, instead, VAT returns will need to be submitted via an application programming interface (API), which links directly to HMRC.
Now is the time to ensure you understand your obligations, to review your current practices and to decide how you intend to make the switch to digital ahead of April 2019.
We are already helping our clients to look at MTD as an opportunity, not something to oppose. We can assist you with choosing and implementing a system suited to your business and we can provide sound advice and support throughout the transition and beyond.