From 1 April this year, Making Tax Digital (MTD) has become the requirement for VAT. It applies to all taxpayers whose taxable turnover is more than the registration threshold and is in force from the first full reporting period commencing on or after 1 April.
This new way of declaring information to HMRC will not give them any new access to records, and the submissions will still only consist of the same nine boxes that the Government Gateway submissions did. However, it does mean taxpayers who fall within the remit of the scheme must both keep their records in a digital format and submit those records to HMRC digitally. This can be through the use of dedicated accounting software such as Xero, or by using so-called ‘bridging software’.
Using bridging software allows you to take records from non-MTD systems and use digital links to flow these records through a spreadsheet, and from that spreadsheet the software can submit them to HMRC. All the data must be linked digitally; there can be no manual overtyping.
For those of you requiring bridging software and advice around how to use it, Hazlewoods has invested in software and can assist you with the implementation of MTD and submitting your returns. We have also produced a template that can be utilised for preparing your return data ready for submission through the software.
If you are one of the more complex taxpayers, for example part of a group registration, then there is a six-month delay to MTD going live for you, but it will be commencing from 1 October. HMRC should have already written to you to advise you of this delay.
If you have any questions about how to implement MTD or how it may impact you, speak to Julian Millinchamp or one of our Indirect Tax team at the Cheltenham office on 01242 237661.