Businesses urged to prepare for Making Tax Digital VAT rollout

tax-icons-3334326 crop
DSR Tax Claims advised businesses they may have to keep both digital and paper records to comply with new VAT requirements.

Businesses which are over the VAT threshold are being advised to prepare ahead of the Making Tax Digital VAT rollout, due on 1 April 2019.

David Redfern, MD of DSR Tax Claims, issued his guidance to affected businesses in order to assist them to prepare for the start of the mandatory requirement that VAT records be digitised for all businesses with a taxable turnover of £85,000, the current threshold for VAT registration. Businesses below the current threshold, who are currently registered for VAT, may choose to opt into Making Tax Digital (MTD) for VAT but are not legally obliged to.

HMRC recently issued its VAT Notice 700/22 to provide businesses with further information regarding the MTD for VAT requirements which will make digital VAT returns mandatory for VAT periods beginning on or after 1 April 2019.

Story continues below

Redfern commented: “All businesses with a taxable turnover greater than the VAT threshold will have to keep their VAT records digitally and send their VAT returns to HMRC using MTD-compatible software for VAT periods which begin on or after 1 April 2019.

“So, if your VAT accounting period runs from 1 March 2019 to 31 May 2019, your next VAT period beginning 1 June 2019 will need to be MTD-compatible.”

He added that businesses which subsequently fall below the VAT threshold will continue to be required to send digital returns. However, certain exempt groups would be permitted to opt in or out of MTD by informing HMRC in writing. Exempt groups include those for whom digital VAT returns are not reasonably practical due to disability or remote location, as well as certain religious groups.

Redfern warned businesses that they may still be required under law to keep non-digital VAT records, depending on the nature of their software and any legal requirements to preserve them in their original form.

He stated: “The future may be paperless but MTD won’t initially remove the requirement to keep any physical business records. Depending on the software and data recorded, it may still be necessary to retain a paper copy of the business record – for example, where only certain data is recorded from an invoice, you would still be required to retain a copy of that invoice for your business records because the software wouldn’t be recording all the data from the invoice.

“Where the software scanned and saved an image of the entire invoice, the business may not need to require a physical copy, though some records are required by law to be retained in their original form.”

Additionally, Redfern cautioned businesses to consider their data backup arrangements carefully in order to ensure that vital financial data is not irretrievably lost in the event of technological failure.

Tags : businessDSR Tax ClaimstaxVAT
Clare Nicholls

The author Clare Nicholls

Leave a Response

Protected with IP Blacklist CloudIP Blacklist Cloud