Getting your VAT-registered business ready for Making Tax Digital

Making Tax Digital (MTD) is undoubtedly the biggest change to the administration of tax since the introduction of PAYE in the first half of the last century. The Government has revised its timetable for MTD several times since it was first presented. Under the latest plans, VAT registered businesses with taxable turnover above the VAT registration threshold (£85,000) will have to keep digital records from 1 April 2019.

Making Tax Digital for VAT

For VAT return periods commencing on or after 1 April 2019, affected businesses will no longer be able to submit their VAT returns through the government gateway. Businesses will be required to use MTD-compatible software which prepares a VAT return and sends it to HMRC. To be MTD-compatible, the software must integrate with HMRC systems to send VAT returns to HMRC, known as API-enabled software.

How do I get my VAT-registered business ready?

If your business is already using cloud-based, API-enabled software that appears on HMRC’s approved list, and you perform no adjustments to VAT outside of your bookkeeping system, you will already be MTD for VAT compliant and will not need to take any further action.

However, the following are not MTD compatible as the business will not be able to submit its VAT return digitally:

  • Desktop software
  • Bespoke software
  • Software that is not listed on HMRC’s approved list
  • Excel spreadsheets
  • A combination of software and excel spreadsheets
  • Maintaining records manually

If your software supplier does not appear on HMRC’s approved list, we strongly urge you to get in touch with them and request an update on whether they plan to be compliant by April 2019. If the answer is no, you should seek urgent advice from your MHA Carpenter Box adviser on the options available to you in order to make digital submissions of VAT returns from April 2019.

Read more in our Tax Planning Guide


Get in touch with one of our Making Tax Digital experts on 01903 234094 if you need further guidance or advice.