If your business is registered for VAT, there are some far reaching changes happening which will be implemented for most businesses this April.

Making Tax Digital (MTD) will be implemented for any VAT returns which need submitting after 1^st April 2019.  All VAT records will need to be kept digitally, using software which is MTD compatible.

There are a small number of businesses who are being allowed to defer the start of digital reporting for 6 months, but the vast majority of businesses will have to comply.

There are 3 key challenges for businesses, and it is important that businesses are prepared ahead of the April deadline.

Record Keeping

Manual records are no longer good enough.  Digital records must be kept using ‘functional compatible software’, which means software which can connect to the HMRC using an Application Programming Interface (API).  There is a requirement to collect more information after April than is currently the case.

VAT Returns

Returns can only be submitted using the HMRC API platform.  Manually entering figures will not be possible. 

Timing

MTD for VAT will be implemented on April 1^st 2019.  You may have noticed that this is a couple of days after the UK formally leaves the EU.  There is some uncertainty around how VAT transactions between the UK and the EU will be treated, and you can virtually guarantee everything won’t go as smoothly as promised!  No large scale computer system is ever launched without there being some glitches…

Conclusion

It clearly won’t be good enough for your business to wait until April to ensure your VAT systems are ready.  If you’ve not implemented a MTD VAT compatible software system already, you need to start soon.  And of course if you need any help in preparing your business, please don’t hesitate to get in touch.  Its only a matter of weeks away…