Less is more – MTD regulations relaxed
Starting from April 2019, most VAT-registered businesses that have a taxable turnover over £85,000 are required to keep their VAT records digitally and use Making Tax Digital (MTD) compatible software to submit their VAT return information to HMRC. There are exceptions for certain businesses that have until the first VAT Return period starting on or after 1 October 2019 to start using MTD for VAT. This includes businesses that are part of a VAT group or VAT division, use the annual accounting scheme or that make payments on account. If your business has a turnover under the VAT registration threshold, you are not currently mandated to use the MTD for VAT service but can opt to do so if you wish. HMRC also has also announced a number of other relaxations that will help businesses adapt to MTD. For example, HMRC has agreed to give businesses until 31 March 2020 to make sure there are digital links between software products. This means that during the first year of MTD for VAT, businesses who use more than one software programme to keep their VAT records and prepare and file returns will not be required to have digital links between those software programmes. From March 2020, bridging or MTD-compatible software will be required so that this information can be digitally sent to HMRC with no manual intervention. It has also been confirmed that where a supplier issues a statement for a period, you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown. Although, HMRC is keen to point out that it is best practice to record the individual supplies digitally as this means less risk of invoices either being missed completely or being entered twice (as an invoice and as part of a statement).