Posted by Wendy Andrews on July 18, 2017
The government announced last week that there will be a delay in the introduction of Making Tax Digital for direct taxes until at least 2020, though possibly until after the next general election which will be held in 2022.
However, the introduction of digital reporting for VAT is still due to begin on 1 April 2019.
In addition to online filing of VAT returns, as is the case currently, VAT registered businesses are also likely to be required to upload transaction-level data in a specified format.
Further information about this will be required from HMRC in a very short timescale, to enable businesses to make any necessary systems changes to facilitate this process.
A House of Commons briefing paper states that: “as VAT already requires quarterly returns” no one will have to report more often than they do at the moment. However, this ignores the annual accounting scheme which is available for businesses with a turnover up to £1.35m. It doesn’t have a huge take up, but this will reduce the benefits of the scheme for them.
It also implies that it’s just a matter of “keeping digital records”. More guidance is required on this. Even though most VAT-registered businesses will use some kind of accounting system, the big question is likely to be whether they can adapt what they already have, or if they will need something new.
As the change will coincide with the expiry of the Article 50 Brexit notification period in March 2019, it may also see changes in the reporting and documentation of international transactions with the EU, so advance preparation will be essential.
If you would like to discuss these issues, please contact your usual Bishop Fleming adviser, or a member of our VAT team.