We have previously published Insight articles explaining the detail of MTD here and those who may qualify for a deferral here. This article is focused on what you need to do to be ready for the implementation of MTD.

Software

The first consideration is whether you are using compatible software. HMRC have published a list of software that is compatible with the new system here and you should ensure that your software is on that list. The second consideration in respect of software is to ensure that if you are using more than one system to collect or store records that are required to be maintained digitally that these systems transfer data electronically, via a “digital link”. HMRC have announced a soft landing period of one year where penalties will not be issued if the software does not link digitally, but the final submission to HMRC must be digital. We are happy to advise you on your software choices.

One other quirk of the new system is what information needs to be maintained digitally. This will include the standard required VAT records, but if you currently enter your sales information as weekly or monthly totals, for example, this will need to change to a daily entry which splits out the sales under each VAT type.

If you are a Bromhead client and we prepare and file your VAT returns for you then you don’t need to worry, we will take care of the transition to MTD for you. We will register you with HMRC, connect your software to the new system and let you know if any of your record keeping needs to change in order to satisfy the new rules.

Registration

If we do not prepare your VAT returns for you then there are some important steps that you need to be aware of and timing is key. In order to avoid issues with the transition then you must ensure that you sign up with HMRC at the appropriate time. MTD comes into force for your first VAT return commencing on or after 1 April 2019. This means that you need to maintain digital records in an acceptable format from this date and submit the first VAT return under the new system.

Quarter End Dates	First MTD VAT Return
March, June, September & December	Quarter ending 30 June 2019
April, July, October & January	Quarter ending 31 July 2019
May, August, November & February	Quarter ending 31 August 2019

If you prepare monthly VAT returns then the April 2019 will be your first return under MTD, but if you use the annual accounting scheme then your first MTD return could be months away.

These dates give a deadline for when you must be ready to submit your return under the new system, but your records must be kept digitally from the beginning of the relevant VAT return period. However, almost as important is the date that you register for MTD. Once you register there is no going back, you must submit all future VAT returns through the new system. For this reason we would advise you not to register until after submitting your last VAT return under the existing system.

For example, if your VAT return is prepared for the quarter ending 31 March 2019 then you should wait until this return is filed before registering with HMRC for MTD. As the filing deadline for this return is 7 May 2019 it may be that you need to wait until after this date. Similarly, if your last VAT return under the current system is for the quarter ending 31 May 2019 then you should register after this return is submitted, which could be 7 July 2019.

As a further complication, HMRC advise that if your VAT payments are taken by direct debit then you should not register for MTD until at least 5 days after submitting your last non-MTD VAT return.

Once you are sure that you have got your timing correct, follow these steps to register with HMRC:

1. Sign up to the HMRC Making Tax Digital for VAT by following this link. You will need the following information:

• Your Government Gateway ID and password
• Your VAT registration number

Once you have signed up HMRC will send you a confirmation email within 72 hours. You should not attempt to submit a VAT return under the new system until after this email is received.

2. Authorise your software to file your VAT returns under MTD. This process will differ depending on your accounting software, but must be completed after registration with HMRC. If you are unsure how to do this you should contact your software provider. Some software providers have not yet finalised this process as they are still catering for the MTD pilot, but it should be a simple process.

If you have any questions or need assistance with this process please contact us below.