18th December 2017

HMRC has today (18th December) made draft regulations, coupled with a draft explanatory memorandum and draft VAT Notice, available for public comment. The legislation will make changes to the VAT regime effective from April 2019, from which it will be compulsory for all businesses to keep their VAT records in a digital format. Business must also have an automatic software bridge in place to deal with VAT return submission and flow of information to HMRC.

After various issues and setbacks emerged when the Making Tax Digital road-map was originally laid out in December 2015, HMRC delayed the initiative until 2020 at the earliest. With online submissions of returns already compulsory for VAT, HMRC view it as the natural first step as they look to introduce the Making Tax Digital scheme across all taxes.

The legislation will, from 1st April 2019, require businesses with a taxable turnover above the VAT registration threshold to keep and preserve digital records, providing VAT returns to HMRC using compatible (automatic) software.

An addendum to the draft VAT notice has also been made available by HMRC, which outlines how businesses could use compatible software alongside spreadsheets to provide VAT returns. The consultation for this draft amendment closes on the 9th February 2018.

Mark Hetherington, VAT Partner at UNW, adds: “Thankfully HMRC have recognised that many businesses need to make legitimate manual adjustments to their VAT return calculations before the return can be submitted to HMRC, so it is pleasing that HMRC now accept that an additional link (such as a spreadsheet) can be introduced between the chosen accounting software and the automatic VAT return filing requirement.

“The timing of the proposed change, however, is alarming as it occurs just after the UK is due to leave the EU. HMRC’s focus on any change should have been around the import/export piece for trade with EU Member States post Brexit instead of tinkering with the method of VAT return submission.”

He continues: “There is no immediate need for businesses to make an immediate change to VAT return processes and software, but clearly a topic for further thought as we approach the Autumn of 2018.”

For more information regarding UNW’s VAT and indirect tax services, please visit our VAT and Customs page or alternatively, you can contact Mark directly at markhetherington@unw.co.uk or on 0191 243 6000.


Making Tax Digital

Many of you will now be aware of the impending introduction in April 2019 of Making Tax Digital for VAT

charitable donations

Interesting trends around large charitable donations have emerged after a Freedom of Information (FOI) request from private client law firm

charity taxation

It has been over 20 years since charity taxation and reliefs last came under scrutiny in the United Kingdom, but

Charity Board Appraisal

Since the updated Charity Governance Code was published in the summer of 2017, many charities have begun to assess themselves against

We are delighted to share with you our latest Charity Group Bulletin, available for download via the following link. Click