Recent surveys suggest that only 50% of affected businesses are aware of the new rules being brought in from April 2019 in relation to VAT. Even those who are aware of the changes are not prepared, with 20% of those who are aware of them currently have no plan at all.
If you have followed this blog, you will be aware that we have been critical of the proposals under MTD (see here) however HMRC and the government have continued to press ahead with them and it appears very likely that the rules for VAT will be coming in in April 2019, and will be compulsory!
From that date, all businesses who are required to be VAT registered (i.e. they are above the VAT registration threshold) with be required to comply with the MTD for VAT rules. From April 2019, such businesses will be required to keep business records digitally from the start of their accounting period and will need to file in an MTD approved manner.
A spreadsheet can be used to keep records, however MTD-compatible software will be needed to send HMRC the VAT returns and so bridging software might be required in order to transfer the data between systems. HMRC have announced a ‘soft landing’ for digital links, giving businesses until April 2020 to make sure there are digital links between software products, but preparation now makes sense, because it is a radical departure in terms of there being a Government prescribed method for record keeping.
If you are concerned about the new rules and would like help understanding them, please get in touch with David Stebbings. It is better to be prepared now rather than waiting until April!