It’s a matter of months before thousands of businesses will be required to take part in the Government’s new programme, Making Tax Digital (MTD) for VAT.

If your business is VAT-registered and has annual taxable turnover above £85,000, you could be included from as early as 1 April 2019. That means it’s essential to prepare now if you haven’t already started.

From choosing your software to understanding the rules, here’s everything you need to know ahead of the rollout.

When does MTD for VAT start?

The scheme officially begins on 1 April 2019, but the date you need to start making MTD-compliant tax returns will depend on your VAT return quarters.

This is shown in the table below:

VAT return quarters

MTD start date

Ending 31 March, 30 June, 30 September, 31 December

1 April 2019

Ending 30 April, 31 July, 31 October, 31 January

1 May 2019

Ending 31 May, 31 August, 30 November, 28 February

1 June 2019

What are the requirements?

Once you’re included in MTD for VAT, you or your accountant must:

record and maintain digital VAT records

send VAT returns to HMRC using compatible software.

This means paper records alone will no longer be enough to meet your legal record-keeping obligations.

It also means you’ll need to ensure the software you use is able to connect with HMRC by accessing its application program interface (API).

There are several options for this, but we recommend KashFlow as a user-friendly option for online accounting.

KashFlow is set to release its MTD functionality in the next few weeks, so it will be fully compatible with the requirements by the April deadline.

Which records do you need to keep?

Under MTD for VAT rules, you’ll need to keep a record of:

  • 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.

What’s next?

Further developments to MTD are expected to be introduced for other businesses and individuals.

These are set to take effect from April 2020 at the earliest, but no dates have been formally announced so far.

Even if you’re not included in the first stage of the scheme, switching to online software can help simplify your accounting processes, minimise the risk of errors, and save you time.

Get in touch

If you have any questions about MTD or KashFlow, we can help.

Email us or call us on 01628 631 056 to learn more our accounting and VAT services.