VAT Returns, Registrations and Making Tax Digital (MTD)

Value Added Taxation (VAT)

VAT is one of the most time-consuming areas of running a business – and can be one of the most costly if you get it wrong.

At Parker Hartley & Co, we advise and assist you on VAT registration and can help you manage the VAT once you’re registered, we also deal with all the planning and integration of HMRC’s making tax digital (MTD) in order to remove the worry for you.

Don’t wait until your next (or first) VAT return is due before getting professional assistance. It could be an expensive error.

In addition we can help with:
– VAT tax planning.
– Dealing with any disputes that arise with the VAT office and being in attendance at VAT visits and inspections if required.
– Putting the necessary systems and procedures in place in order to ensure that you and your business is ready to comply with Making Tax Digital which comes into force for quarters commencing on or after 1st April 2019. 
– Deciding if you should voluntarily become VAT registered.

We can also advise on the most suitable VAT scheme for your business. Choices include:
– Cash Accounting – If your turnover is within the limits for the scheme you will only need to pay VAT when you are paid by your customers. This provides a significant cash flow advantage for businesses if you have money owing to you.
– Flat Rate Scheme – Businesses eligible to join this scheme can simplify their VAT accounting by applying a flat rate percentage to their sales and paying this amount to HMRC. We can show you how to calculate if you are likely to save any money by this.
– Annual Accounting – With this scheme you agree an annual liability, based on the previous year’s figures, and pay this over on an instalment basis. At the end of each year a final return is submitted and any balance due is paid or overpayment refunded.
– Special Schemes for Retailers – Ordinarily, registered traders are required to keep detailed sales invoices for every transaction. For retailers this could prove burdensome. To avoid this, retailers can use one of the special schemes set up that don’t require this. We can help you decide which one is best for your business

How we can help:

Whether you use any of the special schemes outlined above, or become registered for VAT depends on your individual business circumstances.

If you are already VAT registered and need your VAT returns preparing and submitting then we can also do these for you.

If you are unsure what to do, let our team of experienced staff advice you on how to proceed. Please call us now on 01904 612 455 or contact us.

Please click here to see the latest VAT thresholds and rates.

 

Making Tax Digital (MTD)

What is Making Tax Digital?

Making Tax Digital (MTD) is a government initiative to improve and streamline the way HMRC collects tax. It comes into force on 1 April 2019 and means, for affected businesses, a change to the way they prepare and file VAT returns. Specifically:

  • HMRC’s online VAT portal will close from April.
  • VAT returns must instead be submitted to HMRC through MTD software.
  • Businesses must digitally record their VAT transactions and returns using MTD software.

Who is affected by MTD?

VAT-registered businesses above a threshold of £85,000 will have to keep digital records and submit their VAT returns using MTD-compatible software. Making Tax Digital for business (MTD) begins on 1 April 2019 with MTD for VAT. Businesses below the threshold will continue to use the HMRC online portal and then follow the digital requirements from April 2020 onwards.

MTD for corporation tax has yet to be confirmed but it will not become mandatory until, at least, April 2020.

MTD for anyone that completes self-assessment tax returns – self-employed, partnerships, trusts and landlords – have yet to have a date for mandatory income digital tax reporting set.

What do you need to do?

To be compliant with MTD, you need to maintain your taxable records digitally and must submit your VAT returns through MTD-compatible software – such as Xero and Quickbooks.

Businesses with a turnover above the VAT threshold of £85,000

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

Your business will be in Phase 1 of Making Tax Digital  and you will have to be compliant by the 1st April 2019.

Businesses with a turnover below the VAT threshold of £85,000

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

Your business will be in Phase 2 of Making Tax Digital  and you will not have to be compliant until April 2020 at the earliest.

Sole-traders, partnerships, landlords and trading companies. In addition the inclusion of corporation tax and self-assessment into Making Tax Tax Digital

  • MTD-compliant software or apps will have to be used to keep a digital record of financial transactions
  • MTD-compliant software or apps will have to be used to submit quarterly updates to HMRC for both income and corporation tax purposes

Phase 3 of Making Tax Digital  is unlikely to come into force until April 2020 at the earliest.

How do you know if your software is compliant?

Please click here to see a list of HMRC approved MTD software providers. What if your software isn’t on the list?

  • If you’re using software that is not MTD for VAT compliant, you have two options:
  • Move to MTD for VAT-compliant software. Complete the form to the right if you need help with this.
  • If you are still wedded to spreadsheets, there is an alternative which involves using bridging software, with an API link to HMRC, to make MTD compliant submissions.

What do I need to do next?

1. Register for an online Government Gateway account- click here to start this process. Please note that you will need to allow time for completing the application as your activation code will be sent by post and can take 30 days to arrive.

2. Find out when you you’ll need to make your first MTD submission by referring to the three phases above.

3. Decide whether you are happy to do this yourself or whether you would feel it would be beneficial for us to assist you with this, either initially or ongoing. 

4. Decide how you will digitally record transactions?

5. Learn the process and ensure you know what you need to do when you are required to do so.

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