The regulations to bring into force Making Tax Digital for VAT are now law. This means that digital VAT returns will be required from 1 April 2019.
MTDfV is the first phase of HMRC’s landmark Making Tax Digital (MTD) regime. This will ultimately require taxpayers to transfer to a fully digital tax system. Regulations have now been issued which set out the requirements for MTDfV.
The new rules will mean businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes. They must also provide their VAT return information to HMRC using MTD functional compatible software.
HMRC is piloting MTDfV during 2018, ahead of its introduction in April 2019. Keeping digital records and making quarterly updates will not be mandatory for taxes other than VAT before April 2020. Businesses below the VAT threshold, which have voluntarily registered for VAT, can however opt in to the scheme.
The actual recording of supplies made and received must be digital this will not mean businesses are mandated to use digital invoices and receipts. It is likely that third party commercial software will be required. Software will not be available from HMRC. Spreadsheets will be allowed, but they will have to be combined with add-on software to meet HMRC’s requirements.
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