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Making tax digital.... it’s a requirement

At the tail end of 2017, HMRC published its draft regulations that will guide how the government transitions VAT accounting into the digital age.

The VAT regulations are a part of the government’s wider Making Tax Digital (MTD) initiative, which will end the practice of submitting paper tax returns and will eventually abolish the annual tax return itself.

Digital VAT: recap

The government previously announced back in July 2017 that businesses above the VAT threshold (£85,000) will be the first to use the digital VAT system from April 2019.

This will be the first tax to be fully ushered into the digital space as part of the wider MTD strategy.

As a firm we have been looking into cloud bookkeeping solutions and have decided to promote KashFlow.

To help clients decide if this is the solution for them, we will be co-hosting an event with KashFlow on 27 March 2018 at the Holiday Inn in Maidenhead (10am start).

There will be a KashFlow presentation on how the system works and how it will help you meet the Making Tax Digital requirement. 

If you're interested in attending, email lydiav@knightandcompany.co.uk before 21 March 2018. 

In addition, we knew that VAT-registered businesses would have to maintain electronic records under the new system.

However, in the absence of any regulatory announcements, we did not know exactly what information businesses will be expected to keep and how they would be expected to keep it.

The VAT regulations

The regulations published in December 2017 make changes to the incoming digital VAT regime.

The draft VAT notice states that all VAT-registered businesses will be legally required to keep digital records within a software program.

You will use this software to calculate and submit your VAT return.

The draft notice states the software used must be able do the following:

  • record and maintain electronic records
  • send information to HMRC, such as returns that are drawn from the electronic records
  • receive information from HMRC.

Businesses will also be required to maintain the following accurate digital records:

  • your business’ name
  • your registered address
  • your VAT registration number
  • details of any VAT accounting schemes (if applicable)
  • sales information: including the time, value and VAT rate charged on the sale.

The government has recently finished consultations on the digital VAT regulations and we therefore await the publication of a final regulatory framework over the coming months.

Get in touch

Do you need assistance with your VAT return?

Our accountants and business advises can provide assistance with any aspect of VAT: from registration and submitting returns, to reconciliation and applications to accounting schemes, we can help every step of the way.

Contact us on lydiav@knightandcompany.co.uk or call 01628 631 056 to learn more our accounting and VAT services.