As you will be aware, the Making Tax Digital (MTD) proposals change the way VAT registered businesses maintain their records and create and submit VAT Returns. More information can be found elsewhere on the Making Tax Digital pages of our website.
We are in ongoing discussions with HMRC about MTD. They are looking to enrol businesses into a VAT pilot commencing in April 2018. This is what HMRC say about the trials:
The pilot will start in April 2018, with the chosen businesses submitting their VAT returns using this new system. HMRC will monitor the progress of their VAT returns to ensure the system is working as expected before the new service is opened more widely.
All you need to do is submit your VAT return using the new system. You’ll have access to plenty of help if you need it and will be able to check you’re doing things right as you go along.
What are the benefits of taking part?
- The way businesses like yours submit their VAT returns is changing; taking part in this pilot means you’ll be ahead of the game.
- You will be able to get used to the new system at your own pace, have access to more support and get to practise using the service before it becomes mandatory.
- HMRC will personally keep you up to date with what is happening as the service develops and how it affects you.
- You also get an opportunity to influence how the service looks and feels.
- Finally you’ll have enhanced reassurance with immediate access to check if you are doing things right or need clarification.
Will my business be under greater scrutiny if I take part?
No - any monitoring is for testing purposes only, there are no additional compliance checks.
Returns successfully submitted through the new system will undergo the same checks as they were submitted through the current system.
What if I sign up and then decide I no longer want to take part?
As this is a new system, there may be some technical hiccups. HMRC has promised to do its best to address these swiftly, but if for whatever reason you find you no longer want to take part in the trial, you are free to leave at any time.
What exactly is the change that is taking place?
- VAT Registered Businesses with a turnover above the VAT threshold will be obliged to maintain their business records digitally and submit their VAT Return through a new system.
- Any VAT return with an accounting period that starts on or after 1st April 2019, is affected.
If you or any of your clients are interested in taking part in the trial, you or they can contact HMRC at makingtaxdigital.mailbox [at] hmrc.gsi.gov.uk. HMRC will then get in touch to complete a short survey which will help them establish specific features about the business in order to manage the trial period.
If you do ask to take part in the trial, we would appreciate you letting us know, so that we can gain your feedback in how it is operating. Please do contact us at atttechnical [at] att.org.uk. Similarly, if you have any comments or suggestions about MTD, please also send them to atttechnical [at] att.org.uk.
Update 7 February 2018
HMRC have clarified that businesses using spreadsheets to keep their business records are eligible to take part in the VAT pilot.
In response to concerns that the pilot may only be open those businesses who used accounting software to keep their records, HMRC stated that:
“The Government and HMRC are on record in saying that it accepts the use of spreadsheets as a digital repository for maintaining business records. Nothing has changed here, and the pilot envisages and hopes spreadsheet users will join. The key here is that the journey from the spreadsheet to HMRC must be digital, so the volunteer must ensure the data taken from the spreadsheet and sent through the new secure MTDfB API requires no rekeying.”
As noted by HMRC, an essential requirement for spreadsheet users to take part in the pilot is that they have the ability to submit their VAT returns electronically using the MTD systems. HMRC acknowledge that this could be through their agent. For example, a business could save a spreadsheet (or associated digital file) to a memory stick and pass this to the agent, who could load this into their own package for review and subsequent submission.
Where businesses do not use an agent for submission their only approach would appear to be the use of a submit only software package. HMRC indicate that although such products are in development, they are not aware of any being commercially available at this time. This is likely to limit the ability of such businesses to participate in the pilot, at least in the short term.