From April 2019, any VAT registered business with taxable turnover above the registration threshold will be required to submit digital VAT records and make digital returns as part of HMRC’s Making Tax Digital format. Voluntary VAT registered businesses with turnover below the VAT registration threshold will not be required to take this new approach until a later date.
The most important issue with this new approach is that HMRC will not be creating their own software to do this, so any business that currently submits their VAT return through HMRC’s website, will no longer be able to do so. Businesses will need keep their records on one of HMRC’s approved software providers platforms.
So far, 18 suppliers including Intuit (Quickbooks), IRIS (KashFlow), PwC, Xero and Sage, are listed as having tested their products in HMRC’s test environment and having demonstrated a prototype of their software to HMRC. According to HMRC, more than 130 software providers have registered their interest in taking part in the pilot scheme which has been running since April 2018.
As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like detailed specific advice please contact us.