VAT & Making Tax Digital

All businesses are required to keep accurate records for both taxation and VAT (Value Added Tax) purposes. VAT is one of the most complex and onerous tax regimes imposed on business - so complex that many businesses inadvertently overpay or underpay VAT. We will also run a series of tests to see if there is a benefit in employing the Standard Rate or Flat Rate Scheme. We can also offer advise in respect of applying for the Option to Tax scheme, enabling the reclaim of VAT on property purchases, renovations or whether to opt out from such a scheme.

Making Tax Digital in the UK from 2019

Get set for digital returns
HMRC have set out their intentions to become one of the most advanced tax authorities in the world by enhancing the customer experience whilst also closing the tax gap. They aim to do this through the Making Tax Digital initiative, which will transform how HMRC deal with their customers.

Who does it affect?
Making Tax Digital (MTD) covers both individuals and businesses across a number of taxes. For businesses over the VAT registration threshold, VAT is the first tax selected for digitalisation in the UK. This will take effect from 1 April 2019 for most businesses. For Income Tax and Corporate Tax, MTD will not be mandated until April 2020 at the earliest.

So what does this mean for VAT registered businesses?

There are three key digital components to Making Tax Digital for VAT (MTDfV):

  1. Digital records
    Although this does not mean businesses will have to store each invoice and receipt digitally, the transaction data will need to be stored digitally. This includes an AP and AR transactional listing and a digital VAT account from which the VAT return is prepared.

  2. Digital links
    VAT returns must have digital links to digital records – spreadsheets can remain, but they will need ‘digital links’ to source systems. HMRC has announced a soft landing period of 12 months, however digital links will be mandatory from April 2020.

  3. Digital submission
    At present, most businesses submit their VAT returns through manually re-keying into HMRC’s online portal. This will no longer be permitted once Making Tax Digital comes into force and instead, VAT return submissions must be done digitally via HMRC’s Making Tax Digital API. Digital submission of VAT returns will be required for most businesses for periods starting on or after 1 April 2019. vat-notice-70022-making-tax-digital-for-vat

The ever-widening scope of VAT, the constant stream of detailed changes to the regulations, and the ever growing demands of Customs and Excise call for a trained professional eye to ensure that you do not fall foul of the regulations and do not pay the Exchequer more than you need to!

Distance selling of goods, means that a supplier sells goods to private individuals or customers established in another Member State who do not apply VAT to their intra-Community acquisitions of goods. The supplier takes care of the transport of the goods to the customers. A typical example is mail order companies.

VAT of the Member State of destination is applied if sales in that Member State exceed a certain threshold (€100,000 or €35,000 or the equivalent in national currency). For the threshold applicable in each Member State , see the Commission's information document "VAT in the European Union" or Thresholds - Annex I(14 Kb). Even if the threshold is not exceeded, traders can still opt to identify for VAT in the Member State of the consumer and charge the VAT applicable in that country.

We provide an efficient cost-effective VAT service, which includes:

  • Assistance with VAT registration both in the United Kingdom and all countries within the European Union
  • Advice on VAT planning and administration
  • Use of the most appropriate scheme
  • VAT control and reconciliation
  • Help with completing VAT returns
  • File on line to meet current regulation
  • Planning to minimise future problems with Customs and Excise
  • Negotiating with Customs and Excise in disputes and representing you at VAT tribunals

If you would like more information or would like to ask us a question then call us on 0161 283 9639. JT Accountants take every care in making their recommendations and offering advice, any contract is bound between the selected accountant and the client.

JT Accountants cannot be held liable for any failure on the part of either of the parties concerned. JT Accountants is a trading name of JT Accountants Limited Company No. 06554865. Registered in England and Wales. Registered Office Flat 1, Sir Matt Busby Way, Old Trafford, Manchester, M16 0QG.



JT Accountants

Tel. 0161 283 9639
Suite 1, Sir Matt Busby Way, Old Trafford, Manchester, M16 0QG.