17th April 2019

After years of deliberation, HMRC have implemented their Making Tax Digital for VAT (“MTD”) scheme, which went live on 1 April 2019. However, for certain businesses that are covered by one of the categories where MTD has been deferred, they do not have to enter into the initiative for another six months (see our previous article on this). The scheme went live despite the fact that various business bodies made representation to the HMRC regarding the proposed introduction of the scheme and its timing, as the business community faces uncertainties surrounding Brexit.

For businesses affected by the 1 April change, there are two factors that affect when your first VAT returns under MTD will be required to be submitted. These are:

  • For businesses on a monthly VAT return profile, the first returns will be for – in general terms – the month of April. The deadline for filing these returns is 7 June 2019. Those on a monthly profile would ordinarily be in a net VAT reclaim position so, in practice, would submit their VAT return much sooner.
  • For businesses on a quarterly VAT return profile, the first returns will be for the quarter ending June. The deadline for filing these returns is 7 August.

A factor that is now apparent from HMRC’s introduction of the scheme is that their current online platform for VAT and other taxes will not directly link with the new Making Tax Digital platform. As a consequence, businesses are required to enrol for the new platform; as the process is not instantaneous, our advice is that business look to do this at least three weeks prior to the first VAT return which falls under MTD.

In addition, if you are a business that does not currently pay their VAT return liability by direct debit, we recommend that consideration should also be given to doing so. This is because of the slight cash flow benefit it offers by deferring payment by three working days after the due date. Further, it generally simplifies the payment process. If setting up a direct debit, we advise that this is done first, and through the existing VAT online facility before enrolling for MTD.

Details on registering for MTD can be found here, and details for setting up a direct debit can be found here.

If you are uncertain of any of your business’ obligations under MTD, regarding the switch to the new form of VAT return submission or keeping business records in the required digital format, please do not hesitate to contact one of the following:

Hazel Smith, Accounting Services Partner, on 0191 243 6278 or at hazelsmith@unw.co.uk; Carol Reed, Accounting Services Senior Manager, on 0191 243 6016 or at carolreed@unw.co.uk; Ian Coulthard, VAT Manager, on 0191 243 6017 or at iancoulthard@unw.co.uk; or Mark Hetherington, VAT Partner, on 0191 243 6073 or at markhetherington@unw.co.uk.

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