As of the 1st of April 2019 VAT-registered businesses with a taxable turnover above the VAT registration threshold (£85,000) need to keep digital VAT records and submit their VAT return to HMRC using Making Tax Digital-compatible software.
This was made mandatory for VAT return periods starting on or after 1 April 2019. Taxable turnover includes standard, reduced and zero rated. But does not include exempt supplies or income outside the scope of VAT.
HMRC made the decision to delay mandation for 6 months until October 2019 for a small minority of customers with more complex requirements to ensure sufficient time for testing the service.
This timetable shows when different types of business could join the pilot and when they will be mandated to use the Making Tax Digital system.
HMRC launched a Making Tax Digital pilot for VAT working closely with software providers so that they could continue to test their systems and products.
If, as a business, you are eligible to join the VAT pilot, getting involved now helps prepare for these changes sooner rather than later. Your feedback also helps to shape the service as it continues to develop. It’s important that businesses have the appropriate software package, so you should speak to your software provider or agent first if you have one. Contact me if you don’t. I can help you with this.
Once a business starts using Making Tax Digital for their VAT returns, it can no longer file returns using the HMRC online portal.
HMRC have published a VAT Notice about MTD which you may find useful.
Help and support
Get in touch with me if you have any concerns about Making Tax Digital. I can help you.
Find out more about Making Tax Digital for VAT by taking a look at the following posts