HM Revenue & Customs (HMRC) has warned that registration for Making Tax Digital (MTD) for VAT will take up to seven days to complete and will not be a real-time service. Continue reading HMRC reveals MTD registration takes seven working days
All businesses that fall under the MTD for VAT regulations from 1 April 2019 will be required to register on HMRC to be able to submit through MTD compliant software.
We are recommending clients do not register until they have submitted their final VAT return under the existing system. Once registered you cannot submit through the old nine box route.
For example a business with a March quarter return which is due on 7 May 2019, should not register until they have submitted this to HMRC. If they register for MTD for VAT in early April before submitting the March return, HMRC would expect this return to be submitted through MTD compliant software instead of the nine box input screen. Therefore it is crucial to consider the timing of when you register.
The registration process from point of submission to confirmation can take up to 72 hours, as HMRC have to switch your VAT registration from the current VAT mainframe to the new Enterprise tax management platform, which we understand is a manual process.
Making Tax Digital’s (MTD) deadline is looming, with companies above the turnover threshold of £85,000 well underway when it comes to training their staff to use MTD compliant software. Continue reading Making Tax Digital pilot has been extended to partnerships and flat rate schemes
The House of Lords Economic Affairs Committee has criticised HM Revenue & Customs (HMRC) for its handling of Making Tax Digital (MTD) and called for a delay to some of the regime’s mandatory requirements.
The majority of VAT-registered businesses with taxable turnover above the VAT registration threshold of £85,000 will need to keep digital records and file their VAT returns using HMRC-compliant software or methods on a quarterly basis from April 2019.
However, having reviewed the requirements for MTD and its promotion by HMRC to businesses, the committee has recommended that the new rules for VAT should not be made mandatory next year and should instead allow businesses to ‘go digital’ at their own pace.
The Lords also recommended that the Government wait until April 2022 to apply MTD to other taxes to give HMRC time to learn lessons from the implementation of digital taxation on VAT.
Within its report, Making Tax Digital for VAT: Treating Small Businesses Fairly, the committee was also highly critical of HMRC’s public promotion of the new regime, which only began in any significant way several months ago.
Lord Forsyth of Drumlean, Chairman of the House of Lords’ Economic Affairs Committee that authored the report, said: “HMRC has neglected its responsibility to support small businesses with MTD for VAT.
“Small businesses will not be ready for this significant change to their practices, especially with Brexit taking place three days earlier,” he added.
The committee’s report has already gained the backing of a number of leading accountancy organisations, including the Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT).
While a series of false starts and changes of direction have made Making Tax Digital (MTD) seem more complicated than it might need to be, new e-invoicing requirements that come into effect in Italy from 1 January 2019 make it look like a walk in the park.
The Italian tax authorities will require VAT-registered businesses to issue electronic invoices converted into .XML format to other VAT-registered businesses. They will then need to sign the invoices digitally, before sending them through the Italian tax authority, Sistema di Interscambio’s ‘SdI’ interchange system.
Businesses will need to archive each invoice for 10 years.
The aim of the scheme is to promote the use of digital technologies amongst businesses and to tackle tax evasion and VAT fraud.
The Lords Economic Affairs Committee says the Government need to listen to small businesses and delay the rollout of Making Tax Digital for VAT programme by at least a year.
Recently, the House of Lords’ Economic Affairs Committee has called for HM Revenue & Customs (HMRC) to halt the deployment of its Making Tax Digital for VAT programme.
A report conducted by the committee found that small businesses are unlikely to be ready for April 2019 and as a result, HMRC must begin to listen.
“Nearly 40 per cent of affected businesses have not heard of Making Tax Digital, let alone have started to prepare for a substantial change to their accounting processes,” the report said.
“HMRC is alone in its confidence that all one million businesses will be ready for Making Tax Digital for VAT in April 2019. They have underestimated the time for research, planning, training and system changes that some businesses will need.”
The Economic Affairs Committee report highlighted that HMRC must treat small businesses fairly, and the April 2019 deadline could lead to “unjustifiable risks” for businesses.
The committee also raised concerns about the software required by businesses to comply with the programme, emphasising that there had yet to see any free software products offered by HMRC.
The committee explained: “The emerging software market appears difficult to navigate. It is unfair to expect businesses to make choices about their accounting software without a better understanding of the future Making Tax Digital regime.”
Committee Chairman, Lord Forsyth said HMRC had “neglected its responsibility to support small businesses” by implementing the programme.
“Small businesses will not be ready for this significant change to their practices if it is introduced on 1 April, particularly with Brexit taking place three days earlier. The Government must delay its introduction.”
The committee has recommended that instead of making the programme mandatory from April, HMRC should allow businesses to join on a voluntary basis for at least a year. This ensures companies are ready, but also it allows the software market to develop and ensure that the department’s systems are “fully and appropriately tested”.
Lord Forsyth said: “Making Tax Digital for VAT will make life even more difficult for small businesses, given their scarce resources to devote to preparing for the change. If HMRC insists on mandating Making Tax Digital for VAT, it has a duty to support small businesses with its implementation. So far, HMRC appears to have neglected this duty.”
In a world where everything is done online such as banking, paying bills and shopping, it makes sense for HM Revenue and Customs (HMRC) to bring tax affairs fully into the 21st century. Continue reading Bringing tax into the 21st century
With Making Tax Digital (MTD) for VAT due to be rolled out in less than six months’ time, Lords have warned that there is “overwhelming evidence” indicating that businesses are still “under-prepared.” Continue reading Lords committee warns of “huge under-preparedness” ahead of Making Tax Digital
HM Revenue & Customs (HMRC) has this week opened a pilot scheme for Making Tax Digital (MTD) for VAT – the first phase of the Government’s digital tax reporting overhaul. Continue reading Making Tax Digital for VAT pilot launched by HMRC
With only six months left until the launch of Making Tax Digital for VAT, HM Revenue & Customs (HMRC) has finally begun sharing information with businesses about the new regime.
While accountants and professional advisers across the UK have been making clients aware of the new digital system for more than two years, the nation’s official tax authority has remained fairly quiet on what has been described as one of the biggest changes to taxation in the last 70 years.
However, in mid-September HMRC finally began making businesses aware of their plans, initially posting a tweet linking to a new webpage entitled Making Tax Digital: How VAT businesses and other VAT entities can get ready.
The new webpage provides simplified guidance to businesses, outlining the criteria for businesses that will be mandated to join the scheme i.e. those registered for VAT with a taxable turnover above the VAT registration threshold (£85,000).
According to AccountingWEB, HMRC has revealed that it has further plans to increase its social media and public relations activity around MTD, as well as directly contacting those businesses affected via post.
HMRC also confirmed that it will publish details of the compliant VAT reporting products later this year when the current private pilot becomes public. A list of software companies currently working with HMRC is, however, already available here.
Howard Worth are holding free Making Tax Digital events, the next one of these is on the 21st of November. You can find out more and book a place at the event by clicking on the link below.