Key tax and accounting deadlines
HMRC , Making Tax Digital , Tax , VAT
To some degree, yes. You will no longer be able to submit VAT return directly onto HMRC government gateway.
However, spreadsheets count as digital records, so you can continue to use these but you will need to use bridging software to enable you to submit the VAT return from within the spreadsheet.
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It’s a digital tool that will allow data to be sent directly from a spreadsheet to HMRC’s government gateway.
Most online accounting software already has this tool installed within it so that you can submit the VAT return directly from it.
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You will need to check that your turnover for the 12 months ending 31 March 2019 is less than £85,000. If it more than this, you must comply with the new rules from 1 April 2019.
If your annual turnover subsequently drops below the threshold, you must still comply with the MTD rules.
If the annual turnover is less than £85,000, you do not need to comply with MTD from 1 April 2019. However, you must continue to keep an eye on your annual rolling taxable turnover because if you do exceed the threshold at any point, then you are in. For example:
| 12 months ended… | Taxable turnover is … | MTD applies to me? |
| 31 Mar 19 | £80,000 | No |
| 30 Jun 19 | £90,000 | Yes |
| 31 Oct 19 | £70,000 | Yes, as previously over threshold |
Our advice is to make sure you are MTD compliant from 1 April 2019, even if you are below the threshold. This is because you must be in from April 2020, and it will save you the hassle of continuously checking your turnover in the meantime.
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The MTD rules apply from your first VAT period starting on or after 1 April 2019. Depending on when your VAT quarter ends, your first MTD applicable VAT return will be:
1 April 2019 to 30 June 2019 OR
1 May 2019 to 31 July 2019 OR
1 June 2019 to 31 August 2019
VAT registered businesses who only exceed the threshold after April 2019, must be MTD compliant for the VAT period starting after the date it was exceeded.
For example, if your turnover is below the VAT registration threshold until, say November 2019, the business must be MTD compliant for any VAT period that starts on or after 1 December 2019.
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The transactions leading to the figures on your VAT return must follow a digital journey, with no manual intervention.
As long as any adjustments made on the spreadsheet are then put into the accounting software, and the VAT return is submitted directly from within the software, then there is no interruption in the digital process and you are MTD compliant.
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For each sale you make you must record the date, net and VAT amount. This means most businesses must record every individual sale separately.
However, HMRC have agreed that retailers only need to digitally record daily takings figures rather than each transaction.
In your case, the daily takings records need to be directly input into your accounting software, weekly input is not compliant.
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Where you are required to adjust your VAT return in order to comply with VAT rules, you must record this adjustment in compatible software. Only the total adjustment amount needs to be recorded in the software, not the details of how the calculation was done.
So, for example, you can calculate the partial exemption adjustment in a spreadsheet as long as you then record the resulting adjustment amount in compatible software.
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You can sign up to MTD via the Gov.uk website and searching “Use software to submit your VAT returns”. Once you’ve signed in using your Government Gateway credentials, you’ll be asked a series of questions about you and your business.
For more information, you can follow this tutorial video provided by HMRC:
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Compatible software is what you and your accountant will use to store your digital information and also send the information and VAT returns to HMRC.
For more information, you can watch this video provided by HMRC:
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HMRC have recently announced that a small range of businesses will be given a further 6 months to October 2019, before they must comply with the MTD rules.
The 6-month deferral applies to businesses within the following categories:
- trusts,
- ‘not for profit’ organisations that are not set up as a company
- VAT divisions and VAT groups
- public sector departments that must provide extra information on their VAT return
- local authorities
- public corporations
- traders based overseas
- those required to make payments on account and who use the annual accounting scheme
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