Making Tax Digital for VAT - Are you ready for 1 April 2019 and beyond?
30 July 2018
Making Tax Digital – or MTD as it’s known – is the biggest shake-up in the UK tax system in a generation. It involves a range of HMRC initiatives which will see the digitisation of tax reporting for individuals and businesses. Making Tax Digital for Business (“MTDfB”) is the Government’s flagship policy to move all business-related tax reporting online with the aim of making it more accurate, more reliable and more efficient.
The Government has confirmed that the NHS and other public bodies will need to comply. This means that NHS organisations will be required to make, preserve and submit their existing tax records electronically.
Whilst the implementation for other taxes has been delayed until at least April 2020, some of the requirements relating to VAT will become effective on 1 April 2019. The initial obligations will be introduced on the following key dates:
By April 2019:
- Digital VAT return submission: taxpayers will need to submit their VAT returns digitally, using an application programming interface (“API”);
- Digital VAT records: certain transactions, VAT accounts and summary of outputs must be kept digitally.
- Digital links: taxpayers will need to have a clear 'digitally linked' audit trail from the transaction records to the VAT return filing. This is a marked shift and will require manual transpositions to be removed from the VAT process and may require significant software changes.
Full details of the changes can be found in VAT Notice 700/22: Making Tax Digital for VAT, available via this link.
It is clear that this is a direction of travel towards the audit of tax records in real time. For many NHS bodies, this will require significant changes to current systems and procedures.
So, is your organisation ready for the changes?
We recommend that everyone undertakes a review of their current systems and procedures to determine what actions are required to ensure you remain compliant with the new legislation. You will then be able to determine which of the solutions is best for your organisation. It could be as simple as a spreadsheet (which should satisfy the requirements for 2019) or, more likely, a new software package (which can also help with automating VAT compliance procedures).
We are working with a number of NHS trusts around the country to help them develop the best solution for their organisation. We’d be delighted to come and share our experience and discuss your options with you. Please contact one of us below:
Adam Timmins - [email protected] - 07841 874 476
David Phelps - [email protected] - 07768 880 267
Mark Eastwood - [email protected] - 07740 923499 (North of England)