Big changes afoot on VAT

QI have heard that there is a big change coming in 2019 with a move to submission of VAT returns electronically. My business already files online and has done for quite some time. Am I missing something here?

AThere is indeed a big change coming this year. What you have heard is the first stage of the government’s Making Tax Digital (MTD) programme – the move to introduce a modern digital tax system in the UK.

From April 2019, all VAT-registered businesses with taxable turnover above the

VAT threshold (£85,000) will be required to keep their VAT business records digitally and send VAT returns to HMRC using MTD-compatible software.

There will be six months’ grace afforded to complex organisations such as trusts, not-for-profit organisations that are not companies, some public sector entities, those required to make payments on account and annual accounting scheme users – all of whom will need to comply from October.

Once MTD kicks in for VAT, you will no longer be able to login to your online VAT account and manually input the figures into your VAT return.

Major accounting software providers and online accounting providers are preparing their software to be MTDready. You should check now that your current software is compliant. If not, start looking for a new online accounting package.

Don’t think of this as extra burden. Businesses should see MTD as an opportunity to improve efficiencies. Keeping real time information will ultimately help you to understand how your business is performing and give you the ability to make business decisions quickly.