If your organisation has a turnover of the minimum VAT threshold (£85K), it is mandatory for your organisation to submit your VAT under Making Tax Digital rules for VAT quarters starting after 1st April 2019.
HMRC has allowed for complex organisations to defer MTD for six months. These include Trusts, Not for Profit Organisations that are not incorporated and local authorities. (More info here)
VAT registered organisations that are under the £85K threshold can voluntarily submit VAT returns under MTD if they wish to do so.
Here are a few steps that can get you on track:
- Sign up for MTD on www.gov.uk/guidance/making-tax-digital-for-vat#sign-up-for-making-tax-digital-for-vat at least one week before the VAT return is due
- Sign up to software that are MTD compliant, here is a list of compatible software’s
- Authorise the software to enable it to submit VAT under MTD requirements
- If you have an agent acting on your behalf – authorise your agent to enable them to submit the VAT returns on your behalf
- HMRC has a 12 month soft landing period. During this period you can use compatible spreadsheets to submit your VAT returns. However, HMRC do not encourage submission using this
Things to do for MTD:
- Upload scans/pictures of invoices and documents that have VAT onto your software or computer. The most effective way to do this would be to save an electronic version as soon as the invoice/receipt received. Many softwares like QuickBooks now allow you to click a picture from your phone and upload it directly onto the software.
- For cash accounting VAT scheme all invoices and receipts linked to the payments made/received in the quarter would need to be uploaded too.
- For those registered for Flat Rate Scheme for VAT, you do not need to keep digital records of purchases unless they are capital expenses on which VAT can be claimed back.
- For Organisation that have partial exemption calculations, the total of each adjustment will need to be kept as a digital record, not the details of the calculation underlying them. However, it is a good idea to maintain a digital link to the calculation journals as it would help with any future investigations.
- Digital records need to include date, value of transaction and the VAT rate charged. For more info see link below.
Here is a link on a guide on keeping records for MTD: