Making Tax Digital

Making Tax Digital[/et_pb_text][et_pb_text admin_label="Page Subhead" _builder_version="3.17.2" text_font="Open Sans||||" text_font_size="20" background_size="initial" background_position="top_left" background_repeat="repeat" max_width="900px" module_alignment="left" custom_margin="0px||0px|" use_border_color="off"]Contact our award-winning team today to discuss all of your Making Tax Digital requirements or submit your questions below and we will promptly respond to your requests.  [/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version="3.17.1"][et_pb_column type="4_4"][et_pb_text _builder_version="3.17.2"]

Introduction to Making Tax Digital
If you work in Indirect Tax and have a VAT registration in the United Kingdom then you will know about MTD which is the HMRC’s ‘Making Tax Digital’ initiative, part of a plan to make HMRC one of the most digitally advanced tax authorities in the world. If you do have a VAT registration in the UK and do not know about MTD then you better get in touch with us or your tax advisor – pronto![/et_pb_text][et_pb_toggle admin_label="Introduction" _builder_version="3.17.2" title="Introduction to Making Tax Digital" saved_tabs="all" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64" disabled="on" disabled_on="on|on|on"]If you work in Indirect Tax and have a VAT registration in the United Kingdom then you will know about MTD which is the HMRC’s ‘Making Tax Digital’ initiative, part of a plan to make HMRC one of the most digitally advanced tax authorities in the world. If you do have a VAT registration in the UK and do not know about MTD then you better get in touch with us or your tax advisor – pronto![/et_pb_toggle][et_pb_toggle admin_label="MTD in a nutshell" _builder_version="3.17.2" title="MTD in a nutshell" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64"]MTD in a nutshellIn a nutshell, for VAT, MTD is about the capture and storage of all transactions in an electronic format and to electronically – with no manual intervention to the data – interface the VAT return to the HMRC portal. This will replace the current option to manually type your VAT return figures into the online portal. MTD is not just to do with indirect tax (VAT). Indeed, the MTD plan is to improve all aspects of tax, including corporation and payroll taxes as well as VAT. Of course, for most of you reading this, you may think that MTD is just a new requirement for the tax payer. You’d be right – MTD is about improving the quality of the data from those submitting VAT returns, but as HMRC have repeatedly said, MTD is as much for them as it is for the tax payer.
When you understand this, it will put into perspective the very small steps being taken by HMRC with MTD, and why the requirements are not actually that scary.
Really, this is just a stepping stone for VAT reporting in the future… HMRC will no doubt eventually want to emulate countries like Spain, Portugal and Poland, who use the SAF-T based extracts that are uploaded on an almost daily basis. Or, perhaps copy the likes of Hungary and Italy by introducing live invoicing. Basically, HMRC has made huge changes to their own hardware and software, pretty much replacing the foundation of their tax capabilities. So, MTD is as much about moving companies to this ‘new platform’ as it is about the electronic uploading of the VAT returns.[/et_pb_toggle][et_pb_toggle admin_label="What do I have to do?" _builder_version="3.17.2" title="What do I have to do?" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64"]So we now know what the changes are on the HMRC side, lets now look at what you need to be doing. 1. There is NO change to what needs to be uploaded, it’s the same 9 VAT boxes 2. All VAT files have to be kept digitally. What this means is that you should ideally be investing in an accounting system to enter all your invoices where VAT is concerned and that any amount of VAT that is either paid as part of a sale or recovered as part of a purchase has to be against a digitally captured transaction.Using excel is a grey area to capture your transactions but we understand it is allowed and so can be considered as a digital record but please check with your VAT advisor on this point. 3. The VAT returns must be uploaded electronically with no capability anymore to manually type the numbers of your VAT return to the current on-line portal. 4. This has to be done by a direct submission from your accounting solution or by the use of approved bridging software. 5. There was talk of providing voluntary supporting data but this is currently on hold so currently not a requirement 6. You can apply to HMRC to request special treatment under special circumstances which for example could be that you are decommissioning a piece of software over the next two years so don’t want to spend the time and money automating the VAT here when the solution won’t be around for long.[/et_pb_toggle][et_pb_toggle admin_label="What are the timescales?" _builder_version="3.17.2" title="What are the timescales?" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64"]The confirmed date for MTD for VAT is 1st April 2019, the day after Brexit is due to happen! But it has been said that there will be a 12 month ‘soft landing’ approach.  
Delay to MTD launch date?
Well no, not quite. On 19th October 2018, HMRC announced a six month delay to MTD launch, but only for a small minority of businesses that have more complex requirements. For these businesses in question, HMRC has made the decision to ‘defer mandation’ for an extra half year, in the interests of ensuring that there is sufficient time for testing the service. So, applicable businesses will instead have until 1 October 2019 to start keeping records digitally and using MTD-compatible software to send their VAT returns to HMRC.  
Which business can defer their MTD reporting?
According to the HMRC, the deferment only applies to those that fall into one of the following categories:
  • trusts
  • ‘not for profit’ organisations that are not set up as a company
  • VAT divisions
  • VAT groups
  • those public sector entities required to provide additional information on their VAT return (such as government departments and NHS Trusts)
  • local authorities
  • public corporations
  • traders based overseas
  • those required to make payments on account and annual accounting scheme users.
To put this in perspective, the deferral will only apply to around 3.5% of mandated customers.  
What about the other 96.5% of mandated businesses?
If you pay VAT and you don’t fit into one of these categories, then the 1st April 2019 date still applies.[/et_pb_toggle][et_pb_toggle admin_label="Why MTD is not the new GDPR" _builder_version="3.17.2" title="Why MTD is not the new GDPR" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64"]When GDPR was introduced, it created a fair degree of uncertainty in the market, which confused a lot of people. This confusion sparked constant calls for clarity – what was it? How would it affect my business? Where can I find out more? And thus, the perfect foundations were laid for a host of unscrupulous businesses to whip up fear for their own ends… Capitalising on this artificially created fear, many companies sought to charge stupid amounts of money to provide advice and ‘get you ready for GDPR or risk being obliterated by The Death Star’ etc. We are seeing the exact same thing happening with MTD… So hopefully this ‘demystification’ will stop you from becoming one of the victims and keep your money in your pocket. That said, MTD is a great excuse for any tax department to finally get some budget to improve the tax solution as a whole (we know how reluctant CFOs tend to be when it comes to spending anything on tax). If you remember nothing else, remember this: MTD is not the new GDPR, so avoid the scaremongering and think twice before parting with your money. In fact, if you’re a small business or have simply VAT reporting requirements, take a look at our options below – we have some links to some HMRC approved partners offering free solutions. If you don’t fall into that category don’t worry, there’s an option for you too.[/et_pb_toggle][et_pb_toggle admin_label="What are my options" _builder_version="3.17.2" title="What are my options?" open_toggle_text_color="#d25304" closed_toggle_text_color="#054a64"]The options are largely going to come down to how well your accounting or ERP system is set up to handle and process VAT, your budget and your capability. For many, it is simply not possible to upload a VAT return without first extracting it to Excel where adjustments are made that cannot be captured in the accounting or ERP system. Innovate Tax has tried to lead the way when it comes to providing complete tax solutions. We’ve developed processes that allow for VAT adjustments to be made – and captured electronically – within the ERP solution. 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pricing_item_excluded_color="#999999"]+ Fully compliant to HMRC requirements + Fully integrated with Oracle ERP + Our compliance tool verifies potential issues + VAT data mapping included + Fully supported by us[/et_pb_pricing_table][/et_pb_pricing_tables][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built="1" fullwidth="on" specialty="off" prev_background_color="#000000"][/et_pb_section]]]]]> ]]>

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