This is a quick round up of what Making Tax Digital for VAT is, what you need to do and when.
More information is available in a special section on our blog – click here
What is Making Tax Digital?
If you are registered for VAT with a turnover in excess of £85,000 then you fall within the Making Tax Digital for VAT new reporting regime.
Those with a turnover below £85,000 are not caught within this new reporting regime.
When do the new rules apply?
VAT returns starting on or after 1st April 2019 will be submitted under the new rules.
In reality that means the following timetable:
- By 7th August 2019 for VAT quarter to 30th June 2019
- By 7th September 2019 for VAT quarter to 31st July 2019
- By 7th October 2019 for VAT quarter to 31st August 2019
What do I need to do?
After the cut over to the new rules you just need to file the same information as you do right now – nothing more, nothing less!
(Don’t ask … I know it sounds mad!)
The only difference is that you have to file via a different system or “Gateway” as HMRC call it. So although the previous system worked fine (not broken don’t fix it!) there is now a new one that you cannot access directly. Data needs to be passed to it electronically meaning that you may need a new system to file your VAT return.
That sounds like it will cost a lot – will it?
No and you do not need to replace your existing systems, as long as they are digital which includes spreadsheets, unless you really want to. Among the plethora of software suppliers with Making Tax Digital ready products (see https://www.gov.uk/guidance/software-for-sending-income-tax-updates#VAT) there is a variety of solutions called “Bridging” software.
Such solutions are around the £50 to £100 a year mark. So they need not break the bank and there is no need to spend huge amounts of money on new software or system upgrades, despite what software vendors may tell you.
What is Bridging Software?
Bridging software is a piece of software that links your system or spreadsheet to the new HMRC VAT system (Gateway). It merely bridges the gap between you and HMRC and makes you Making Tax Digital ready.
Many Bridging Software suppliers hold free webinars to show you how to use their systems as well as providing email or telephone support should you need it.