Insights

Making Tax Digital (MTD) is almost upon us, with the new VAT compliance service set to go live on 1 April 2019.  This is a key part of the government’s plans to make tax easier for individuals and businesses.

From 1 April 2019, all VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the MTD portal with HMRC meaning accounting records need to be maintained on accounting software and submit their VAT returns through the software. A small number of VAT-registered businesses with complex requirements have had their start dates deferred to 1 October 2019, to enable them to properly test the submission service before the deadline.

We have been working with a number of businesses who are part of HMRC’s pilot scheme and this early work has highlighted a number of issues that others might encounter.

Early issues identified with MTD

• Once you have signed up to the scheme – either to participate in the pilot scheme or to register for the final live version – all VAT returns must then be submitted through the new MTD portal and not via the old Government Gateway. If you register early you must use the new MTD portal and cannot go back to the old version.

• To use the MTD portal you must be using accounting software that is MTD compliant and checks should be completed well before the deadline to verify this with your chosen provider. If RJP prepare your VAT returns then we will do this for you. Although major software vendors are saying that their software is compliant, we have found a few instances where this is not the case.

• Some clients have been receiving a rejection or error message when submitting their returns online via the portal, but from our experience these are mistakes with HMRC. Clients who are in the pilot scheme have been receiving rejection notices only to find that they have actually been accepted.

• In the early stages of implementing MTD, some clients may want to delay upgrading their accounting software or they may prefer to use manual records in the short term. In either of this situations RJP can help you, because we have access to HMRC approved software which allows us to submit your VAT return directly as an agent acting on your behalf. This may be a simple solution for any businesses who are finding the preparation stages too complicated.

For further information, HMRC has published a helpful  VAT Notice which explains the rules for Making Tax Digital for VAT and about the digital information that must be kept.

If you are experiencing have any issues regarding MTD, please do get in touch with us by emailing accounts@rjp.co.uk or contact Ben Simper.