Farmers face online VAT threat

The shelving of the UK government’s flagship “Making Tax Digital” proposals – which would have made quarterly on-line reporting of farm and other business accountsmandatory– was widely greeted with relief earlier this year.

However, a leading firm of accountants has warned that similar proposals for value added tax (VAT) will be rolled out over the next few years.

Sean Mcginness, director of VAT at Saffery Champness, warned that the move would require a “quantum leap” in accounting procedures for some small businesses, including many farms before the planned introduction date of April 2019.

“One of the biggest challenges will be the switch to compatible software with only around 12 per cent of all businesses currently filing their returns using an appropriate software package,” warned Mcginness.

He said the biggest change for Making VAT Digital would be the requirement for businesses with a turnover of over £85,000 to keep digital records and use MVD compatible software to submit their VAT returns, adding that pilot trials would begin in 2018.

Initially, said Mcginness, there would be no change to dates for filing returns or to the nine boxes of information required when submitting the VAT return.

However,hmrcbelieved that making the system digital would allow them to check details contained in software accounting packages remotely with their already existing auditing packages.

“And taxpayers may find VAT repayments and claims delayed if they are unable to provide VAT information in the format prescribed under the MVD rules,” said Mcginness.