Making Tax Digital for VAT – Are you ready?
You must sign up your business to MTD for VAT if it has a taxable turnover above the VAT threshold (currently £85,000). If you are represented by an agent, they can do this for you, to ensure you are ready.
Making Tax Digital (MTD) for VAT means you‘re required to keep your VAT records digitally and use MTD compatible software to send your VAT returns to HMRC for periods which started on, or after 1 April 2019.
Businesses submitting monthly returns had to file their April 2019 return using MTD compatible software by the 7 June 2019. If you file quarterly, the first quarterly filers who need to file their returns through MTD will be the quarter 1 April to 30 June 2019 and you must file by 7 August 2019. For the quarter 1 May to 31 July 2019 you must file by 7 September 2019 and for the quarter 1 June to 31 August 2019 you must file by 7 October 2019.
Here are some tips to help you get ready:
- You don’t have to sign up to MTD from day one, but you do need to make sure you are keeping your VAT records digitally from the beginning of the period starting on or after 1 April 2019 (if you don’t yet have software there is more information on this below).
- Before you sign-up for MTD, file your last return for the period before you have to join MTD using the old service, as once you are signed-up you will no longer be able to access that service
- If you pay by Direct Debit wait until that payment has been collected to sign up – this will ensure that your payment details are transferred over to the new system
- You should sign-up for MTD at least a week before your filing deadline so that you are registered for the new service in good time to submit your return.
You will need the following information to hand when signing up:
- your HMRC Government Gateway User ID and password you currently use to do your VAT
- your VAT registration number
- the date you became VAT registered
- the UK postcode of where the business is registered for VAT
- the box 5 figure from your latest VAT return submitted to HMRC
- as a sole trader your National Insurance number, full name and date of birth
- for a limited company, the company number supplied by Companies House and the company unique Taxpayer Reference (UTR) number
- for partnerships, the unique self-assessment Taxpayer Reference (UTR) number and the UK postcode for where the partnership is registered
- your business email address
Once the above details are submitted you receive a reference number. Make a note of this and use it if you need to contact HMRC.
Within 72 hours you will receive an email to confirm that you have been successfully signed up and are ready to submit using MTD compatible software.
- If you already use software to keep your VAT records, contact your software provider to make sure it is MTD-compatible and find out what you need to do to enable the new features once you have signed up to MTD.
- After signing-up, you will need to link your software to MTD – a process known as ‘authorising’ the software.
- If you use an accountant or other agent to manage your VAT affairs speak to them as they will be aware of MTD and will probably have already started making preparations on your behalf.
- If you are not represented by an accountant and/or do not already use software, you will need to look at how to capture your records digitally and choose MTD-compatible software
HMRC recognise this is a major change for some businesses. Where businesses are doing their best to comply with the new rules HMRC will take a light touch approach to penalties in the first year but you must ensure your payments continue to reach HMRC on time. If you do have problems help and support is available and you can contact the VAT online services helpdesk on 0300 200 3701.
HMRC’s webinars (a live online presentation) have proved to be extremely popular. You can book to attend a webinar and ask HMRC staff any queries you may have during the live webinar. Register for the next live webinar about Making Tax Digital.