Making Tax Digital (MTD) for VAT has now started for those that fall within the new rules. Just because you are registered for VAT does NOT mean MTD for VAT applies to you. If you are voluntarily registered then you can continue to file your returns in the usual way, that is by typing the entries into the boxes while you are logged on with HMRC.
For those of you who have to be registered because your turnover (sales) exceed the VAT registration threshold then MTD for VAT will apply. We would recommend completing your final return under the old system and, if you pay by direct debit, waiting until the payment has been taken before registering under MTD.
Although MTD applies from the 1 April for companies with a VAT quarter end date of 31 March you will not need to file your first VAT return until the end of July 2019; plenty of time to get registered and set up.
Accounting
Initially HMRC wanted everyone to use accounting software. Their view is that this would be more accurate. At Clearways Accountants, we have seen a number of clients using software without training or assistance make mistakes, so we are relieved to know that spreadsheets are still acceptable to HMRC!
What information needs to be kept electronically under MTD for VAT?
You do not need to keep everything electronically. You can raise your invoices by hand, or using a MS Word template but what you must do is enter the basic invoice details into either your accounting software or onto your spreadsheet.
You should record the purchase invoices digitally, that is onto your spreadsheet, unless you are registered to use the flat rate scheme in which case there is no need to record the purchases under MTD.
Soft landing
HMRC recognise that this is a big change for a number of small and larger businesses. For the first year HMRC, will allow businesses to cut and paste from different accounting systems to create links in the data and the HMRC gateway.
Working with Clearways Accountants and MTD…
We use a number of accounting products and all of these products are ready to file VAT returns under MTD.
We have registered for the MTD for an agent account and so over the next few months we will be asking you to authorise Clearways Accountants to act as your VAT agents under the new system.