Making Tax Digital (MTD) for VAT comes into effect on 1 April 2019. Put simply, MTD for VAT will bring fundamental changes to the way in which businesses prepare and submit VAT returns. Keeping manual records, filling in nine boxes on a VAT return before submitting the information using HMRC’s online VAT portal will become a thing of the past. The future is digital record keeping and filing relevant information with HMRC using MTD-compliant software. 

MTD for VAT will become mandatory for VAT registered businesses with a taxable turnover above the VAT registration threshold (currently £85,000). For the first VAT period starting on or after 1 April 2019, these businesses will be required to keep digital accounting records and use MTD-compatible software to submit VAT returns. 

Transitioning from manual to digital records will be challenging for some businesses so it’s important for those who will be required to meet the April 2019 deadline to assess their situation as a matter of urgency.

There are some exemptions from MTD due to age, disability, remoteness of location or religious beliefs. An application must be made to HMRC along with supporting evidence as to why it is not reasonably practical for your business to comply.

Top tip: Whilst MTD is not expected to become mandatory for VAT registered businesses with a turnover below the threshold before 2020, it is advisable that all businesses, trusts and landlords, evaluate their situation now and consider the options available to future-proof your business and ensure you are fully compliant in good time. Our digital solutions team are on hand to help you prepare.

Read the next section of our tax planning guide: selling your business or return to the main page.

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