26 • INDUSTRYNEWS
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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 submitted to HMRC must
be justified by electronic records. Paper
records are no longer good enough, they
must be held on computer.
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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 with an MTD for VAT interface. With
the exception outlined in the next section,
they can achieve this as follows:
• Give detailed records of all sales
and costs to their accountant or
bookkeeper who keys them into an
accounting system. This might mean
little change for the business other
than the cost.