Ross McConnell - Kinross Based Chartered Accountant

Are You Among The One In Five?

by ROSS MCCONNELL on APRIL 22, 2019

Making Tax Digital

Making Tax Digital (MTD) is now live! So if your last VAT quarter ended on 31st March then you’re in! 

But as you can’t officially sign up until after you file your last non-MTD VAT return, it might not be the right moment to register, yet. 

By way of example, if your business has to file a VAT return for the February to April 2019 period, and it pays by direct debit, then the earliest you can actually sign up is 15 June 2019—five working days after the filing deadline for the final non-MTD VAT return.

Don’t forget either that if your business operates as a not-for-profit organisation, or as a Trust, then you qualify as a deferred business and MTD doesn’t apply to you – at least, not at present. 

But that’s unlikely: HMRC report there are 1.1 million VAT registered businesses – those with VAT taxable turnover above £85,000 – that are now required to start keeping digital VAT records. (By the way, even if you are a not-for-profit, starting to prepare digital records early might still be helpful, to give your business time to prepare and fix any issues.)

Are you certain that you’re not among the 17% of affected companies that apparently still do not know when they will sign up? That’s virtually one in five eligible businesses that are about to get on the wrong side of HMRC, for no good reason other than complacency. 

Don’t be one of them.  

What do you need to do now?
Your records must now be kept digitally, using approved software. Paper receipts can still be kept, but all the records must now be digital, and the submission of the VAT return must be from those digital records – no manual adjustments are allowed. 

For any item supplied, your digital records should include:
-    the time of its supply (ie its tax point)
-    the value of the supply (net excluding VAT)
-    and the rate of VAT charged. 
 
They should also include information about your business, including business name and principle business address, as well as your VAT registration number and details of any VAT accounting schemes you use.

How do you register?
The site for registration is https://www.tax.service.gov.uk/vat-through-software/sign-up/have-software

There, you will need to input:
•    Your Government Gateway ID and password
•    Your company’s VAT number (which you’ll find on your VAT registration certificate)
•    The date your business became VAT registered (from your certificate)
•    The postcode of your ‘principle place of business’, which is the fancy way of saying where your company carries out most of its business activities and/or keeps its financial and business records.
•    The Box 5 amount from your most recent VAT return
•    The month in which your most recent VAT return was submitted.

Once you enter these details, HMRC will verify them and you can then sign up, meaning you’ll be able to submit your next return in the right manner. 

Hardly ‘simples’, but it is necessary.

If you’re not confident everything is set up correctly, then call us now to ensure you comply.

By the way, if your taxable turnover drops below the VAT registration threshold later in the year, then you will still be required to keep digital records and submit your VAT return using MTD-compatible software. This is because you were VAT registered on 1 April 2019. That holds until and unless you de-register from VAT – but you can only do that if you are certain your turnover won’t rise again to exceed the current £85,000 annual threshold.

It’s also not enough to think you can still submit your return through the old Government Gateway. That is a digital platform, but it doesn’t use the appropriate software for MTD, so your return will not be valid. 

The bottom line is… 
Make sure you set this up properly, well before the submission deadline of your next VAT return. 

If you need help moving your bookkeeping across to the right software, want to check that you’ve set things up correctly, or need us to set them up for you, then act now: call us today on 01577 865885. 

You can even use an analogue phone, if you still have one: we won’t mind.

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