UK Making Tax Digital VAT consultation

Fri 19th Jan 2018

The UK has released draft regulations for consultation and draft VAT notice for the April 2019 launch of Making Tax Digital (MTD) VAT. A pilot for tax payers, agents and software providers is scheduled to start in April 2018.

Making Tax Digital for VAT April 2019

MTD is an ambitious programme to digitize tax records and reporting for businesses and individuals for VAT, Corporation Tax and Income Tax. Its aim is to help taxpayers calculate and report their tax right, which many businesses struggle with.

VAT is the first tax to be mandated for MTD, and would apply from April 2019 for all businesses over the annual VAT threshold.

The MTD VAT includes two principle changes:

  1. All businesses to keep and maintain VAT records digitally
  2. Qualifying businesses must submit their VAT return data to HMRC through MTD compatible software, via an API interface, often produced by third party providers. This will represent a change from the current online filing manually or via XML.  The information will complete the 9 boxes of the existing VAT return.

Making Tax Digital Consultation

The regulations issued as part of the consultation confirms which data should be maintained digitally:

  • Business name of the taxable person;
  • Address of the business;
  • VAT number;
  • Any VAT accounting schemes used;
  • The VAT account (the information in this will be used by the software to calculate and fill in the return);
  • Total of any adjustments (not the calculations underlying them);
  • For VAT sales and purchases, the following data:
    • Date of supply
    • Net value
    • VAT charged
  • Totals of any adjustments or corrections made to the VAT account;
  • Totals of sales VAT by different VAT rates; and
  • Daily Gross Takings (DGT) – for retailers using a retail scheme.

Partial exemption calculation need not be maintained digitally. Also, that there will be no non-compliance fines for the first year to allow companies to adjust to the new regime.

More information about Making Tax Digital