The Making Tax Digital (MTD) initiative is specifically designed to evolve and bring the UK’s tax administration into the future. It aims to make the reporting process simpler and more efficient for taxpayers.

The first stage of HMRC Making Tax Digital (MTD) focuses on VAT and imposes new requirements on some VAT-registered businesses and organisations from April 2019.

MTD Implementation: A Roadmap

April 1, 2019: MTD starts for businesses over £85,000 VAT thresholds for periods beginning on or after April 1, 2019.

August 7, 2019: For companies whose quarterly VAT period started on April 1, 2019, the deadline for filing first returns under Making Tax Digital is August 7, 2019.

October 1, 2019: Complex businesses (such as VAT groups, non-profit organisations, and some public sector organisations) who deferred have to start submitting VAT returns.

HM Revenue and Customs (HMRC) is advising businesses that have an annual turnover above the £85,000 VAT threshold to sign up to Making Tax Digital before the 7th August VAT filing date.

MTD VAT Return Submission Process

What Has Changed in MTD VAT?

MTD changes the way you submit your VAT return (9 box figures) to HMRC. Gone are the days of filing your return by paper through XML service or via HMRC’s online tax return portal. It is now digital requiring using a new product that connects to HMRC’s systems.

You can use either:

  • A compatible software package that allows you to keep records and submit VAT Returns
  • Other software (like spreadsheets) that uses bridging software to connect to HMRC systems

Refer Making Tax Digital for VAT as a business guide.

Options Include:

  • API-enabled spreadsheets (Excel add-ins)
  • Cloud-based Bridging software
  • Automated compliance tools
  • Use of 3rd parties to submit on your behalf (outsourcing/use of agents)

 
MTD Digital Records

You must maintain the following information:

  • Business name
  • Address of business
  • VAT registration number of business
  • Accounting schemes used (e.g., Annual, Cash, Flat Rate)
  • VAT Account
  • Total of adjustments or corrections made
  • Date of supply
  • Net value (tax exclusive)
  • VAT amount
  • VAT rate

 
How to Prepare for August 7 MTD VAT Deadline

Businesses paying VAT through direct debit need to sign up with HMRC by the date of July 29, 2019.

If paying by direct debit

  • Businesses need to register by Friday, July 27, providing HMRC the mandatory seven working days. This time will allow transferring existing direct debit to the new MTD system just in time for the first submission.
  • If not paying by direct debit

  • Businesses can register up to three working days before.
  • Explore other methods of payment which include; BACS, online via debit or credit card and CHAPS.

It is essential to start preparing well in advance for this deadline – mainly if you haven’t set up an Agent Services Account and signed clients for Making Tax Digital.

Identify affected Clients & Counsel about MTD Requirements

As HMRC’s August 7 deadline approaches, it’s important to identify which clients will need to migrate to digital accounting. Making Tax Digital presents a significant opportunity to migrate desktop software users to cloud accounting software. However, it is important to move accounts online. This attempt may face some resistance by clients. However, it is important to convince the client about the objectives of HMRC and help the client overcome apprehensions with the right information.

So counselling your clients about the advantages of MTD and its role in digitisation can prepare clients for this important date.

Sign up with HMRC

As an agent submitting Making Tax Digital VAT returns on behalf of clients, you’ll need to sign up for an Agent Services Account. HMRC manages this process. It can be done in a matter of a few minutes, assuming you have all the necessary information at hand. Alternatively, clients can sign themselves up to Making Tax Digital.

It can take up to 72 hours for HMRC to sign the business up (or seven working days if they pay by direct debit), so ensure proper processing time for this step.

Ensure compliance with Making Tax Digital VAT software

Making Tax Digital VAT software gives you greater control and visibility of your VAT with the assurance of being HMRC-compliant.

Both accountants and clients can benefit from:

  • Knowing which VAT returns are due
  • Viewing and adjusting VAT returns with simple steps
  • Get to know minutest transaction details
  • Securely ensure VAT returns to HMRC
  • Ability to see history and notes

 
MTD for VAT Bridging Software

For clients using spreadsheets, or with complex VAT requirements, there’s no need to change systems. All that’s needed to comply with HMRC Making Tax Digital for VAT bridging software.

How Initor Global can help Accountants with VAT Returns Submission before August 7 Deadline?

We will sign up for Making Tax Digital. We can link the MTD compliant software to the agent services account. Upon your approval, VAT returns will be submitted digitally through the new system. In case you are currently using the software, we will ensure that it is compliant with HMRC’s new systems. In some cases, the software will require an update to a newer version. Alternatively, if you are using the desktop version, it might require migration to a cloud-based version. We can guide you to identify the changes needed.

One of the most important steps will be specifically related to the software you use. It will require to log in to your software and link to activate the software to your Digital Tax Account. Different software will have different processes on how to enable.

At Initor Global, we specialise in providing the right support services to help accountants and small businesses on MTD for VAT implementation deadlines. Our Making Tax Digital consultation services include provide counseling on compliant software like QuickBooks, Sage, and Xero to manage your books.

Making Tax Digital

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