Any business who is already exempt from online filing of VAT will remain so under MTD. Those who cannot adapt to the new services due to age, disability, location or religion are also able to apply for an exemption.
If it is ‘unachievable and not reasonable’ for your business to have the digital links in place by the MTD hard landing date (1 April 2020 or 1 October 2020), you will need to make a formal application to HMRC as soon as possible for an extension.
For example this could apply for a business that is in the process of updating its IT systems, however the planned implementation date is not before the end of the soft landing period.
Businesses that benefit from the deferral (VAT groups, entities established overseas etc) will need to be compliant with MTD requirements for digital records from 1 October 2019.
The first MTD VAT return submission will be the first period that starts on or after 1 October 2019 and will depend on your period end:
For NHS Trusts or government departments, HMRC should have written to inform you that you are not required to join MTD before April 2022.
The VAT return data that comprises the VAT return figures should be able to be followed through digital links. After the soft landing period, copy and paste will no longer be accepted by HMRC as a digital link.
From 1 April 2020 (or 1 October 2020 for deferred businesses) systems must use digital links for any transfer or exchange of data between software programmes.
The type of digital link will depend on the software you use:
Bridging software can be used solely as a ‘bolt on’ to accounting software in order to submit VAT information digitally. It can also be used to keep digital records and then directly submit the required VAT information digitally to HMRC.
HMRC have produced an extensive list of bridging software providers which can be found on gov.uk. Whilst there are a number of free bridging software options, users should be cautious as to what protection they have should there be any issues with the software during submission and the extent to which the software supplier is accountable.
VAT groups are still only required to submit the 9 VAT return boxes to HMRC using MTD. How the VAT returns are prepared for a VAT group will depend on whether VAT group members use the same accounting package and /or if preparation of the VAT returns is centralised.
Possible ways to prepare the VAT return are:
Please contact us if you would like to discuss any of these issues and your VAT planning.