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Making Tax Digital: Timing is everything

Michelle Watson

With MTD legislation just around the corner, from April 2019, VAT registered businesses with turnover above the VAT threshold have to submit their VAT returns digitally directly through their accounting software. 

Timing is everything
Under the new legislation, all businesses have to create a new Business Tax Account (BTA) to submit their VAT return to HMRC. (This is separate to your Government Gateway account).

We recommend that you don’t register before you have to – once you create your new digital account you will no longer be able to submit your VAT returns through the Government Gateway. 

Although HMRC are sending out letters encouraging businesses to sign up now, you only have to register once the deadline has passed for your last ‘non-MTD’ VAT return.

For VAT periods ending 31st March 2019, you would need to file your March VAT return through your existing Government Gateway account as usual by 7th May 2019.  You would then need to leave at least 5 working days after the payment has been taken before creating your new Business Tax Account – so on or after 14th May 2019.

HMRC have advised that businesses who are in the scope for Making Tax Digital but don’t register for and file their VAT return through a Business Tax Account could incur a penalty.  Therefore, if you’ve had a letter from HMRC instructing you to set up a BTA you must comply. 

Keeping digital records
Unless notified otherwise by HMRC, the majority of VAT registered businesses must use the new MTD VAT submission process for the first complete VAT period starting on or after 1 April 2019.

The table below shows you when you will need to start keeping digital records and submitting VAT return data through the new MTD system.
Table showing MTD dates
Certain organisations, such as VAT Groups, charitable trusts and larger businesses in the payments on account scheme have had their Making Tax Digital start date deferred until October 2019 to prepare.  However, to qualify for the later start date, you must have received this in writing from HMRC.  If you think you are eligible for a deferral and haven’t received a letter you should contact HMRC directly. 

If you need further advice, please contact your usual Moore adviser.