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Making Tax Digital for VAT - April 2019

By Kathryn Jones

In July 2017 the government announced a revise implementation timetable for its Making Tax Digital (MTD) strategy. The revised timetable will see MTD being rolled out first to businesses with turnover above the VAT threshold from April 2019.

The government has now published draft legislation together with an overview of Making Tax Digital for VAT which provides more information about how the process is expected to work.

The Finance Bill: September 2017 published on Friday 8 September 2017 includes primary legislation for Income Tax and VAT.

On 13 September 2017 HMRC also made available for comment further secondary and tertiary legislation on Income Tax and VAT. The draft legislation can be found here. This comprises:

  • The Income Tax (Digital Requirements) Regulations
  • The Income and Corporation Taxes (Electronic Communications) (Amendment) Regulations

The regulations allow HMRC to use notices or directions to define additional or different requirements and a draft of how the notices might look has been issued.

At the same time HMRC published an overview of the proposed legislation.

The overview gives some useful pointers to how the system will work:

  • VAT registered businesses who are mandated to join the system because they exceed the VAT threshold will have to remain in MTD even if their turnover falls below the threshold. They can only leave MTD for VAT on deregistration.
  • On the other hand businesses with lower thresholds that join MTD for VAT voluntarily will be able to withdraw as long as their turnover is below the VAT threshold.
  • Existing exemptions that apply to online filing will be retained; for both online filing and the requirement to maintain digital records.
  • For the time being there will be no changes to the statutory VAT return or payment dates.
  • Businesses will be able to voluntarily submit VAT information more frequently than their VAT return filing obligations require. These voluntary updates will not discharge the VAT return obligation, nor will they create a VAT liability or repayment.
  • The error correction process is unchanged.

The overview document also provides a useful summary of what the contents of digital records must include. Particularly welcome is confirmation that where an adjustment is made, such as the correction of errors, bad debt relief etc., only the total for each type of adjustment will be required to be kept digitally - not details of the calculations underlying them.

As was expected, the overview makes clear that third party software will be required, so accountants need to ensure that any clients whose records are not already computerised are geared up for the change before 1 April 2019.

To keep up to date with MTD and all training and other offerings from SWAT UK, please visit our dedicated Making Tax Digital page. 

September 2017 


This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.