Making Tax Digital for VAT (MTD VAT) comes into force in April 2019. If your business is VAT registered, you need to take some steps now to make sure you’re ready to submit your VAT returns digitally. Here are some important questions you need to ask so you can take the right actions to meet the deadline.

When will the changes affect you?

MTD VAT requires VAT registered businesses with taxable turnover above the £85,000 VAT registration threshold to keep records in a suitable digital form and file their VAT returns using HMRC compatible software.

The new rules apply to VAT periods starting on or after 1 April 2019. The table below shows when you must start keeping MTD VAT compliant records and when we recommend you start keeping them.

VAT quarter end First MTD VAT return due Compliant records compulsory from Compliant records recommended from *
31 March 2019 Jun 2019 1 Apr 2019 1 Jan 2019
30 April 2019 Jul 2019 1 May 2019 1 Feb 2019
31 May 2019 Aug 2019 1 Jun 2019 1 Mar 2019

* keeping MTD VAT compliant records from this date means you will have one trial VAT return before the new rules come into force.

Is your software compliant with Making Tax Digital for VAT?

The table below will help you decide what you need to do to make sure your software is ready for your first digital VAT return.

Making Tax Digital for VAT

If you currently use spreadsheets, cashbooks or Sage 50 version 23 or below, you need to take urgent action to make sure you can file your VAT return online when the time comes.

Xero will provide its users with all they need to submit their return online. Users of QuickBooks Online will also be catered for, but those on QuickBooks Desktop will need to upgrade.

If you use other software to manage your accounts, contact your provider to check what they are doing to make their software compatible with MTD VAT.

Should you move to a different accounting software?

If you use Sage 50 version 23 or below, or another software that won’t be compliant with the MTD VAT requirements, now is a good time to consider whether upgrading or switching is the best option for you.

We recommend you see MTD VAT as an opportunity to review what you need from your accounting package. Does it do everything you need it to? Are you paying for features you don’t use? How well does it integrate with other software? What will it cost to upgrade vs switch? The features, flexibility and pricing structures of  leading accounting software vary considerably, so it is worth checking if there an option that offers you better-value in your particular circumstances.

For help and advice on choosing the right cloud accounting software for your business, or to discuss getting ready for Making Tax Digital for VAT, contact WMT’s Adrian LeRoux or Jane Spraggs.