HM Revenue and Customs is to change the way businesses submit VAT returns to meet the Making Tax Digital for VAT legislation, which comes into effect from 1st April 2019.
Businesses with a turnover above the VAT threshold, which is currently £85,000, will be required to keep their records digitally, and provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.
Advising it members ahead of the change, the Independent Garage Association (IGA) said: “If you are registered for VAT and your taxable turnover is above the threshold, MTD will apply to you.
“If your taxable turnover drops below the VAT registration threshold at any point after 1 April 2019 you are still required to continue to keep digital records and send HMRC your VAT returns using MTD-compatible software.
“This obligation doesn’t apply if you de-register from VAT or if you are exempt from MTD for VAT.
“If your business has a taxable turnover below the VAT threshold you can also sign up to MTD voluntarily.”
Preparing for Making Tax Digital
The IGA has said MTD does not require businesses to keep additional records for VAT, but they will need to keep records digitally from the start of their accounting period.
An IGA spokesperson added: “If you already use software to keep your business records, check your software provider’s plans to introduce MTD-compatible software.
“If you don’t currently use software, or your software won’t be MTD-compatible, you’ll need to consider what software is suitable for your requirements”.
Digital records should include, for each supply, the time of supply (tax point), the value of the supply (net excluding VAT) and the rate of VAT charged.
They should also include business name and principle business address, as well as the VAT registration number and details of any VAT accounting schemes.
VAT-registered businesses can join the MTD pilot now.
The IGA is also on-hand to help its members get ready for the new tax returns legislation.
For further information about the IGA, click ‘more details’ below.