Clearview National March 2019 - Issue 208 | Page 80
BUSINESSNEWS
Meet the
Deadline
for MTD
With the first deadline for
MTD, also known as Making
Tax Digital, upon us, it’s time
to stop asking whether
it’s necessary and start
focusing on how installers
can implement a solution.
Benjamin Dyer, CEO of
Powered Now, looks at
how to comply with MTD.
» » MTD IS A WHOLE PROGRAM,
running over many years, to get all businesses
and individuals to file their taxes digitally. The
first deadline for VAT registered businesses is
1st April 2019 and all VAT returns for periods
starting on or after 1st April 2019 must be
made under MTD.
There are very few people in business who
enjoy changes to regulation and keeping up
with every change is particularly hard for small
companies. Unfortunately, this is a change
which is compulsory. The best approach is to
get it done as quickly as possible. All of the
best with that.
MAKING TAX DIGITAL – JUST
WHAT IS REQUIRED?
There are two parts to the MTD for VAT
requirement:
• An electronic audit trail of sales and costs
that make up a VAT return must be kept
on computer.
• All VAT returns must be made using
software running on behalf of the
business and that links to the audit trail.
The software must use the new ‘MTD
Portal’. The existing web form for VAT
returns which is currently used by 98%
of VAT registered businesses will not be
available in the future.
In other words, all communications to and
from HMRC will be electronic and everything
80 » M AR 2019 » CL EARVI E W- UK . C O M
submitted to HMRC must be justified by
electronic records. Paper records are no
longer good enough, they must be held on
computer.
HMRC COMMUNICATION
HMRC has been very slow to communicate
about MTD and letters informing VAT
registered businesses only started being sent
in December 2018. The final letters have been
sent in February 2019 so there has not been
too much time to comply.
The result of the communication delay may
be why HMRC are allowing some temporary
exceptions to the rules, which I explain
below.
COMPLYING WITH MTD FOR VAT
98% of VAT returns were already being
submitted electronically through the
HMRC web portal, even before MTD for
VAT became law. However, this was simply
recording the ‘9 box return’ and this web
portal will be closed.
In contrast, only 8% of VAT registered
businesses submit their VAT returns using
their own accounting software running
either on their own computers or in the
cloud. These are disproportionately larger
businesses.
Given these figures, it’s interesting to note
that the major distinction when it comes to
MTD will be between those businesses which
submit their current VAT return from an
accounting system and those that don’t. This
applies whether they run their own system in-
house or it is run by an external accountant.
People using an accounting system to submit
VAT returns are unlikely to struggle with
MTD. Provided all individual costs and sales
are already entered into the system there will
probably be nothing further to do.
However, for businesses that do their own
VAT return manually or get an accountant
or book-keeper to do it, there is more of a
challenge. The critical change is that VAT
registered installer businesses must put all of
their individual sales and costs into a system