Making Tax Digital is less than a month away, so our very own Community all-star and ProAdvisor @EmilyMockett takes you through a readiness plan and common questions she's seeing as we edge closer to 1st April 2019.
In her own words:
It’s probably safe to say that if you run a business or work in the world of accounting and bookkeeping, you probably have heard the term ‘MTD’ being mentioned in the last few months, if not over the last year. Many businesses have recently received letters through the post from HMRC as the April 2019 deadline is fast approaching. For many VAT registered businesses, they are fully prepared and have nothing to worry about. If you’re not prepared, then you haven’t got long to get yourself MTD compliant!
Making Tax Digital (MTD) requires VAT registered businesses with a turnover of £85,000 to file their VAT returns digitally through an approved accounting system such as QuickBooks Online. The £85,000 refers to your sales income and not your profit so this is the first thing to be aware of.
Businesses that also fall into this bracket also have to record and maintain digital records. For many the thought of no longer having to keep filing cabinets in every spare room of your house is a huge advantage to the new way or working. Records should be now being kept safe in the cloud digitally where they are easily accessible at any point in time.
Thinking you may have gone over the VAT threshold recently? When the threshold is exceeded for the first time, businesses must comply with VAT from the beginning of its next VAT accounting period. Please see the below table to see when you need to check your taxable turnover between and when your first MTD VAT return will be required if you have exceeded the £85,000 limit within this period.
VAT Stagger Group - Mar/Jun/Sep/Dec
Check taxable turnover for - Quarter ended 30 June 2019
First MTD VAT return - 12 months ended 31 March 2019
VAT Stagger Group - Apr/Jul/Oct/Jan
Check taxable turnover for - Quarter ended 31 July 2019
First MTD VAT return - 12 months ended 31 March 2019 and 12 months ended 30 April 2019
VAT Stagger Group - May/Aug/Nov/Feb
Check taxable turnover for - Quarter ended 31 August 2019
First MTD VAT return - 12 months ended 31 March 2019 and 12 months ended 30 April 2019 and 12 months ended 31 May 2019
Many businesses are also unsure of when the MTD deadline relates to them. What if their VAT return runs over the April 2019 deadline? The golden rule is businesses will have to comply with MTD regulations and submit their returns from the start of their first VAT return period beginning before or after the 1st April 2019. Please see the below table to illustrate this point.
First mandatory MTD for VAT return period - 1 April 2019 – 30 June 2019
Digital accounting records must be kept from - 1 April 2019
Deadline for filing mandatory MTD for VAT return - 7 August 2019
First mandatory MTD for VAT return period - 1 May 2019 – 31 July 2019
Digital accounting records must be kept from - 1 May 2019
Deadline for filing mandatory MTD for VAT return - 7 September 2019
First mandatory MTD for VAT return period - 1 June 2019 – 31 August 2019
Digital accounting records must be kept from - 1 June 2019
Deadline for filing mandatory MTD for VAT return - 7 October 2019
(Any return period’s that run over April 2019 e.g. 1 February 2019 – 1 April 2019 or 1 March 2019 – 1 May 2019 will not be required to file under MTD until the next VAT quarter.)
@EmilyMockett has written this article, including some of the common questions she has been asked over the last few weeks in regards to Making Tax Digital. If you have any other questions please feel free to reach out to Emily directly on this post. There are also few exemptions to the rules as well as some various VAT schemes that have separate rules. If you have any further questions in relation to this, please do not hesitate to connect with Emily directly.
I can understand the keeping records digitally deadline, I think.
what happens or how is the VAT return for non MTD submitted?
e.g vat qtr ending 31/3/19 due May 29? And VAT qtr ending 28/2/19 due apr
Sorry I do not completely understand your question.
If you have a VAT quarter ending 31/03/2019 then for the new quarter 01/04/2019 you need to ensure that you are compliant under the new MTD procedures listed out above.
If you have a quarter ending 28/02/2019 then the next quarter starting 01/03/2019 will NOT need to be MTD compliant. The next VAT quarter for a company with these periods would be 1st June.
I hope this makes sense.