London city view

Making Tax Digital for VAT: What does it mean for you?

Taxback International is at the forefront of the developing digitalisation of Britain’s tax system, assisting businesses of all sizes to adapt to Making Tax Digital. It is hoped that the improved accuracy that digital records provide, and the fact that information is sent directly to HMRC from the digital records will eliminate transposition errors, and reduce the amount of tax lost to avoidable errors.

Since 1 April 2019, VAT registered businesses with taxable turnover above the UK VAT registration threshold (£85,000 currently) are required to keep records in digital form and file their VAT Returns using functional compatible software.

When is the first MTD VAT return due?

Businesses must start implementing Making Tax Digital from the first day of the first VAT period which begins on or after 1 April 2019.

For example:

  • If your VAT period has a 31 March end date, your first VAT quarter under MTD for VAT started on 1 April 2019.
  • If your VAT period has a 30 April end date, your first VAT quarter under MTD for VAT started on 1 May 2019.
  • If your VAT period has a 31 May end date then your first VAT quarter under MTD for VAT started on 1 June 2019.
  • If your business needs to file a VAT return for the April to June 2019 period, the latest the business can sign up is 31 July 2019 – seven days before the filing deadline.

Making Tax Digital for customers who have been deferred.

A 6-month deferral applies to customers who fall into one of the following categories:

  • Trusts,
  • ‘Not for Profit’ organisations that are not set up as a company,
  • VAT divisions,
  • VAT groups,
  • Public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts),
  • Local authorities,
  • Public corporations,
  • Traders based overseas,
  • and other such as those required to make payments on account and annual accounting scheme users.

It should be noted that HMRC has already started sending confirmation letters to all companies eligible for the deferral. If a letter is not received by a type of taxpayer mentioned above, HMRC should be contacted in order to confirm a company’s status.

Digital record-keeping.

All VAT registered businesses must now keep and preserve their records digitally. This includes the following:

1. Data identifying the company:

  • The business name of the company;
  • The address of the company’s principal place of business;
  • The company’s VAT registration number;
  • Any VAT accounting schemes used by the company;

2. Data of the supplies:

  • Time of supply (tax point)
  • Value of the supply (net value excluding VAT)
  • Rate of VAT charged
  • Only supplies that are to be included in the VAT return need to be recorded in the functional compatible software.

How can Taxback International help?

Depending on your existing tax and financial systems and processes, the switch to MTD for VAT may be relatively straightforward. Taxback International provides a wide range of digital services and support for businesses who are transitioning to meet the requirements of Making Tax Digital.

If your business is concerned about MTD and needs advice now, please get in touch to discuss how Taxback International can assist with the transition.


ROI Calc Calculate your ROI