PwC and HMRC Making Tax Digital Event - What did we learn?

December 11, 2018

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by Ian Bowden Director

Email +44 (0)161 245 2661

by Aidan Coleman Director

Email +44 (0) 7740242033

by Peter Sidwell Manager - Employment Tax Reporting & Strategy

Email +44 (0) 7889 644000

We recently welcomed over 60 guests to join us as we jointly hosted a breakfast seminar with HMRC to help businesses understand the upcoming requirements for Making Tax Digital (“MTD”) from a VAT perspective and also discuss the longer term challenges and opportunities posed by tax digitisation.

With MTD for VAT being the first of many digital legislative changes, beginning in April 2019, it is understandable why businesses are actively engaged on this agenda and this was reflected in the volume of questions following the event. It is clear that planning effectively and investing in the right solutions now are key to ensuring Group’s can more effectively meet future requirements.

The most interesting point that struck me from the session was the variety of different challenges that businesses were facing. It quickly became clear that although there would be similarities in how businesses meet the MTD requirements, each would need to adopt a tailored approach based on their business model, systems and environment.

Claire Williams, from HMRC’s external stakeholder team, responded to a large number of questions from the floor and helpfully clarified several points, including:

  • From April 2020, certain adjustment calculations undertaken as part of the VAT return process, e.g. partial exemption calculations, do not have to be digitally linked and can be calculated manually. However, the result of this should be digitally linked to the VAT return process.
  • Despite the deferral to October 2019 for a small number of businesses to meet the API reporting and digital records requirements, these businesses will still be required to meet the mandatory digital link requirements by April 2020.
  • For those businesses who have both VAT registrations that are deferred to October 2019 (e.g. a VAT Group) and registrations that don’t meet a deferral criteria (e.g. a single VAT registration), these business will still be required to meet the April 2019 requirement for those VAT registrations that don’t meet a deferral criteria. HMRC will be writing to all VAT registered businesses to confirm the date at which they expect them to begin meeting the MTD requirements.

Ian Bowden and Aidan Coleman, specialists from PwC’s Tax Reporting & Strategy Technology and Indirect Tax teams, then provided helpful insight regarding some of the common challenges that businesses are facing. They also gave some real-life examples as to the types of solutions that businesses are implementing to meet MTD requirements, such as enhancing and automating current spreadsheets using innovative solutions or using MTD as a business case for investment in more transformational technology solutions.

Ian also highlighted the link between HMRC’s objectives for MTD and the Business Risk Review Pilot, where businesses will be specifically risk rated on the systems and processes they have in place to support compliance across all areas of tax. As well as this, we were made aware of potential MTD for Corporate Tax requirements, which will be consulted on shortly and which we would encourage Group’s to engage with HMRC on.

Seeing how engaged attendees were with the software being shown following the seminar highlighted that many businesses are still exploring their options to meet the MTD requirements, but are also keen to understand the wider value that these solutions can deliver.

A few key questions struck me following the seminar which I would encourage you to also reflect on… In a tax environment where technology is continuously forcing change into your business processes, are you ready for the move to MTD? Have you considered what is the best solution for your business, taking into account not only what HMRC require now but future obligations too?

For more information regarding the seminar or if you would like to discuss any of the items above with one of our specialists please contact Ian Bowden, Aidan Coleman or Peter Sidwell.

by Ian Bowden Director

Email +44 (0)161 245 2661

by Aidan Coleman Director

Email +44 (0) 7740242033

by Peter Sidwell Manager - Employment Tax Reporting & Strategy

Email +44 (0) 7889 644000