Q & A's

What are the key dates and deadlines for MTD?

 

Monthly

1 April to
30 April

Quarterly

1 April to
30 June

Quarterly

1 May to
31 July

Quarterly

1 June to
31 August

Submit last non MTD VAT Return.

7 May

7 May

7 June

7 July

Earliest you can sign up for MTD via your Agent Services Account.

14 May

14 May

14 June

14 July

Deadline for signed up and authenticated.

16 May

17 July

16 August

13 September

First MTD VAT Return due.

7 June

7 August

7 September

7 October

How do I register for MTD?

You can register for MTD through your existing Government gateway (the one you currently use to file your VAT).

The Revenue’s on-line guidance provides comprehensive guidance, please see the links below.

https://www.gov.uk/guidance/making-tax-digital-for-vat

https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat

https://www.tax.service.gov.uk/vat-through-software/sign-up/have-software#

Can I file my VAT return using the current method after I have registered for MTD?

No, once you have registered for MTD for VAT you must then file your VAT returns using your MTD compliant software.

Hence, it is important to ensure your software is compatible prior to registration.

I currently use excel to keep my business records, what do I need to do in-order to file under MTD?

You will either need an API enabled spreadsheet (these can be purchased from suppliers such as https://123sheets.co.uk/ or https://vitaltax.uk/

You can also use what is known as Bridging software, a list of Bridging software suppliers’ can be found https://www.tax.service.gov.uk/making-tax-digital-software

Or alternatively you can send us your completed excel spreadsheet and we can file the return using our in-house Bridging software. Please contact us if you wish to use this option.

How do I check to see if my software is compliant?

Cloud based products such as Quickbooks on-line, Xero and Kashflow are built to be MTD compliant you will just need to change the VAT settings in the software before you make your first MTD submission.

For desktop products such as Sage line 50, we recommend you check on your suppliers website to ensure that your version of their software is MTD enabled.

For sage go to https://ask.sage.co.uk/scripts/ask.cfg/php.exe/enduser/std_adp.php?p_faqid=42668

My software is not MTD enabled ,what do I do?

You can either :-

  • Use Bridging software to file your returns.
  • Upgrade to the latest MTD compliant version of their software.
  • Send us a CSV file of your VAT figures for us to file using our Bridging software.
  • Consider using cloud based software such as Quickbooks on-line. We have acquired a number of licenses for this and can help you with the setup and training on the product to ensure you get the best efficiencies from this type of software.

If you are using Sage please contact us, as we have access to discounts worth up-to 40% for 24 months through our accountants club membership.

Wallace Crooke currently file my VAT return, what do I need to do?

We will register you to for MTD filling so all you will need to do is send us the new access code that the Revenue will send you once we have started your MTD registration.

What is a digital link?

A digital link is simply the transfer of data from one place to another. HMRC envisage that from the point you record your sales and purchases at the transactional level, all the way through to the VAT return they receive, the information will have flowed digitally (sometimes referred to as the ‘digital journey’). This means not having been summarised for posting into software or having been manually typed out or written.

Examples of allowable digital links between records for MTD are:

  • Emailing a spreadsheet
  • Linking cells from one spreadsheet to another
  • Transferring onto a portable device (e.g. pen drive, usb stick, etc)
  • Excel, CSV or XML export and import
  • Automated data transfer

Please note that ‘cut and paste’ doesn’t constitute a digital link and therefore is not allowed for MTD.

What is an API?

An Application Programming Interface (API) is best described as a ‘secure digital tunnel’, through which digital records can be transferred. It is through and API from your accounting or bridging software that HMRC will receive the digital VAT records from you.

My turnover is less than £85,000, do I have to comply with MTD?

No. Not unless you have already been caught by the turnover test (std +reduced + zero rated sales above the VAT registration threshold) and previously had a requirement to comply. Once you are in MTD for VAT you stay in, no matter how far your turnover falls so long as you stay registered for VAT.

However, in the future the MTD for income tax and corporation tax is likely to go to a much lower turnover level.

Can HMRC see all of my records/transactions?

No, under MTD for VAT, HMRC will still only receive the 9 lines of the VAT return information that you would normally submit.

However, if you subsequently receive a VAT inspection then you can expect to be asked for the backing detail behind the numbers submitted.

Do I have to scan or store my invoices electronically?

No, you don’t. But you do need to keep a record of those transactions in a digital form.

Can I continue to post my purchases from Supplier Statements?

This is still a grey area at the time of writing and we are seeking further clarification on this when it becomes available. In many instances, it would certainly seem sensible to carry on posting from statement information, for example if you have a supplier from which you make multiple purchases every day, however that is not how the MTD guidance is currently written.

Can I still summarise my petty cash transactions and post a monthly total?

We are still seeking further clarification from HMRC on this. Many businesses currently post ‘movement’ in petty cash rather than individual transactions, at present this does not appear to be an MTD complaint way of keeping the digital record, but this will be clarified by HMRC.

What is Bridging software?

Bridging software is a program that enables you to import or cut and post your vat figures from a spreadsheet or non MTD enabled software and then get your VAT return information to HMRC digitally. The bridging software should also be able to receive messages back from HMRC. This is an alternative to submitting data directly to HMRC through a piece of accounting software.

Why may I need Bridging software?

You would need to use bridging software for MTD if you choose to keep your electronic records in excel or some sort of spreadsheet rather than accounting software.

You may also need to use bridging software if you are in a VAT group and/or keep records in more than one system. Ultimately, you have to digitally link the information for your VAT return from the multiple sources into a spreadsheet, which you can then upload/link to HMRC via the bridging software.