Making Tax Digital for VAT: starter’s orders

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Making Tax Digital for VAT (MTDfV) is up and running. Most VAT-registered businesses with taxable annual turnover above £85,000 will now be signed up to HMRC’s new system to keep digital records and file VAT returns using MTDfV-compliant software. But as the system beds in, there are some key points to remember.

Deferred businesses

MTDfV is still being rolled out for some businesses. The start date was deferred for trusts, not for profit organisations not set up as companies, VAT divisions and VAT groups, and some other businesses. HMRC should have notified these businesses of their deferral directly, but MTDfV rules apply for the first VAT return period starting on or after 1 October 2019.

On the horizon

Businesses submitting returns should be aware that, as an online service, MTDfV is subject to occasional downtime. Downtime should usually be flagged up in advance and service availability can be checked here. If filing your own VAT return, it would be prudent not to leave this until the last minute.

HMRC made concessions regarding certain specific aspects of digital record keeping for the initial stage of the new regime: the ‘soft landing’ period. This meant that the requirement for digital links joining all parts of a business’ functional compatible software was eased for the first year of mandation. The use of cut and paste or copy and paste was also permitted instead of a digital link, but only within this period. Requirements are explained at Point 4 in VAT Notice 700/22.

Businesses taking advantage of the soft landing period need to be confident that they can transition to full digital competence in 2020. We will be happy to advise further.

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