No doubt there was a collective a sigh of relief when, on 13 July, HM Treasury announced that they were revising the timetable for the implementation of MTD. The new more realistic timetable is good news, but those affected should resist the temptation to put it on the back burner; there is still much to be done.
At a glance
April 2019 – Businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records but only for VAT purposes. So far so good, as 98% of businesses already do their quarterly VAT returns online.
It appears from this revised timetable that VAT registered businesses that are below the threshold don’t fall under MTD.
April 2020 – Businesses above the VAT threshold will not be asked to keep digital records, or make quarterly submissions for other taxes until at least this date.
MTD will be on a voluntary basis for the smallest businesses.
What’s not clear?
As has always been the case with MTD – very little is 100% clear. We expect more details to be announced over the coming months, but some key questions remain:
Will the way you submit VAT returns change?
The vast majority of businesses submit VAT returns using HMRC’s online software. However, HMRC have said that they would not be providing any MTD software as they expect digital record keeping software to be able to report directly into their MTD system without re-entering figures. It appears therefore that those businesses falling under MTD for VAT, will have to change the way they file their VAT returns. The suggestion is that those businesses that are voluntarily VAT registered, and therefore outside of MTD, will be able to continue using HMRC’s software.
How likely is it that the VAT timetable for MTD will be met?
HMRC have said that a VAT pilot will start by the end of this year with a view to having the system in place by April 2019. However, the fact that the timetable for MTD has already slipped once will not engender confidence.
What happens post Brexit?
The position on VAT post Brexit is not entirely clear, though it is still likely to continue relatively unchanged in the short term.
So what now?
– Although the timetable has changed, you have to assume that the revised timetable will be followed and plan accordingly.
– If you are affected then don’t sit back and relax. Take advantage of the extra time afforded you and start preparing for MTD. Speak to your accounts staff, external accountants and bookkeeper and start to put a plan together.
– Even if MTD doesn’t happen for the foreseeable future, there are many benefits and efficiencies to be had by digital record keeping. Take this opportunity to streamline your accounts processes and software and the potential benefits will go beyond merely compliance with MTD.
This article is written for general interest only and is not a substitute for consulting the relevant legislation or taking professional advice. The authors and the firm cannot accept any responsibility for loss arising from any person acting or refraining from acting on the basis of the material included herein.