Launched on 1 April 2019, most VAT registered businesses are now required to comply with the new Making Tax Digital for VAT regime.
However, many businesses may not be aware that they are required to register to use the new system and that this process can take up to seven working days to complete.
If you pay VAT by direct debit you will need to sign up seven working days before sending your first MTD VAT return and you cannot sign up until at least five working days after sending your last non-MTD VAT return.
When you need to sign up:
|VAT reporting period||Monthly||Mar/Jun/Sept/Dec||Apr/Jul/Oct/Jan||May/Aug/Nov/Feb|
|First MTD return||April 2019||April-June 2019||May-July 2019||June-Aug 2019|
|Submit last non MTD VAT return||7 May 2019||7 May 2019||7 June 2019||7 July 2019|
|Earliest date that you can sign up for MTD||15 May 2019||15 May 2019||17 June 2019||15 July 2019|
|Recommended by HMRC to be signed up by||28 May 2019||23 June 2019||23 July 2019||22 August 2019|
|Sign up for DD payers closes||30 May 2019||30 July 2019||29 August 2019||27 September 2019|
|First MTD return deadline||7 June 2019||7 August 2019||7 September 2019||7 October 2019|
If you pay by Direct Debit you must allow:
- 5 working days after the filing deadline for your final non-MTD return
- 7 working days before the filing deadline to file your first return under MTD
If you pay by other methods, you must allow:
- 24 hours after your last non-MTD return before signing up; and
- 72 hours after signing up before filing your first return under MTD
Late filing of your last non-MTD VAT return affects the dates that you can sign up by.
HMRC has also launched new guidance on the software required to report income tax under MTD, as it is expected that businesses will be required to report and record this information digitally from April 2020 at the earliest.
Some businesses with a turnover below the VAT registration threshold may be tempted to de-register for VAT. Those businesses need to take care, particularly where they retain stocks and assets or have land and property which is ‘Opted to Tax’ as VAT may be due. Such businesses may need further advice to determine whether VAT de-registration is appropriate.
Sarah Jenkins, General Practice Partner and Head of Business Innovation at Milsted Langdon, said: “Making Tax Digital for VAT is finally here, but there remains confusion about when businesses need to register for and report their first digital VAT return.
“It is essential that those who are unsure of their responsibilities regarding Making Tax Digital seek professional advice at the earliest opportunity to make sure they are complying with its requirements and report at the right time – not too early or too late.”