Any Taxable Person with VATable turnover above the VAT registration threshold will need to submit their VAT returns under MTD.
Taxable Person includes trading businesses, as well as commercial landlords and pension schemes with commercial property who have opted to tax.
HMRC has announced a six-month deferral for organisations including:
Organisations qualifying for deferral will need to comply with MTD from 1 October 2019.
In all cases, the requirement to submit digitally will require a change to your current VAT accounting.
Part of the VAT information will need to be extracted, and submitted to HMRC digitally, either using accounting software, or a spreadsheet with functionality to submit directly to HMRC (called an ‘API enabled spreadsheet’ or ‘bridging software’).
Which is my first VAT return that will be affected by MTD?
The first VAT return that requires completing under MTD will be for the first period commencing after 1 April 2019 i.e. the first quarter returns to June 2019, July 2019 and August 2019.
From 1 April 2019 (or 1 October 2019 for deferred organisations), HMRC will be operating a ‘soft landing’ approach.
<>Under the 'soft landing' period full digital record keeping is not required (i.e. the backing VAT information to HMRC is not required to be linked to the submission data).
From 1 April (or October) 2019 it is only necessary to submit the 9 summary boxes you submit presently, together with other information to identify the organisation and VAT quarter.
The requirements are that the VAT return submission must be done via a digital link, rather than through the online portal.
It is not necessary to have the most up-to-date, or an ‘MTD Ready’ software version in order to be compliant for MTD. It is possible to submit VAT returns outside of your accounting software (i.e. using a spreadsheet). The only requirement is that the return is submitted digitally.
Organisations which have VAT registered voluntarily i.e. have registered for VAT but their VATable turnover is less than £85,000, are not required to submit digitally.
This is the first step in HMRC’s plan to modernise the tax system. It has yet to be decided when MTD will be extended to non-VATable businesses but this is in the pipeline. If you have any concerns about MTD and your new filing obligations please get in touch with your usual Crowe contact.