25 October 2018

Making Tax Digital - updates from HMRC on deadlines and partial exemption

HMRC has recently announced that for some organisations the deadline for compliance will be extended from April 2019 until October 2019

Making Tax Digital (MTD) is the new way HMRC will receive tax information from you and will come into effect in April 2019.  All VAT registered businesses will have to ensure they have compliant software to meet the new requirements.  If you have not already done so, you should check the HMRC website to ensure that your current software is compliant.

An extension for certain 'eligible' bodies

HMRC has recently announced an extension to the deadline in some particular cases.

The following eligible bodies will have until October 2019 to comply and can join the pilot scheme from Spring 2019:

•    trusts
•    ‘not for profit’ organisations not set up as a company
•    VAT divisions
•    VAT groups
•    public sector entities required to provide additional information on their VAT return (e.g.Government departments, NHS Trusts)
•    local authorities
•    public corporations
•    traders based overseas
•    organisations making payments on account
•    organisations on annual accounting schemes

It seems charitable companies have missed out as the deferral only applies to those that are not set up as companies. Incorporated charities will still have to comply with the VAT MTD changes from April 2019.

Partial exemption and adjustments

There has been some uncertainty regarding the treatment of partial exemption and other calculations that involve manual process or adjustments. HMRC appears to be relaxing its stance on how they want these adjustments to be dealt with under MTD. They are now saying that manual adjustments can still be typed into a software package as long as it is clear what the adjustment is for. In the longer term we expect HMRC will want all adjustments to be digitised but for now manual entries can continue.

If you currently make VAT adjustments using standalone spreadsheets or manual calculations please get in touch so we can discuss your position and confirm what you need to do to comply and by when.

If you have any questions on VAT, MTD or how to ensure your software complies please contact Alan Glen or Scott Craig.