Making Tax Digital for VAT

With only seven months to go until the Making Tax Digital for VAT #MTDfV deadline, most businesses above the £85,000 threshold should already be integrating the new digital tax system into their processes, but is that happening in reality and do people really know what’s going on?

HMRC has recently published further guidance on the new Making Tax Digital for VAT (MTDfV) scheme, which comes into force on 1 April 2019. MTDfV will introduce new digital filing and record keeping requirements for VAT and will be compulsory for all businesses that are VAT registered in the UK and have an annual turnover above £85,000.

What is Making Tax Digital for VAT?

MTDfV will require almost all UK VAT registered businesses to keep digital records and file their VAT returns through compatible software. It is thought that this is the first step in a long-term goal of requiring real time filing of individual transactions with HMRC.

MTDfV introduces new VAT record keeping rules and the requirement that all applicable VAT return data is digitally linked so that transactions can be traced from source (ie purchase/sales ledger) through to VAT return completion and upload to HMRC.

MTDfV will not alter the deadlines or the frequency of VAT return filings.

How should businesses prepare?

Businesses should review their current accounting systems to map the VAT audit trail and identify areas where digital links will be required. While some may not be compulsory until 1 April 2020, businesses should be preparing their systems for full MTDfV compliance now.

How can we help?

Speak to your usual Lambert Chapman LLP contact who will be happy to answer any questions you may have.

We also publish regular updates on our website and in our client e-Newswire.

Check our events diary for our MTD updates which we will host in the run up to the MTDfV deadline.

Posted by Nick Forsyth