In May, we said that we would be making some changes to Ibcos Gold as a result of the UK government initiative known as Making Tax Digital (MTD). From April 2019, all UK VAT registered businesses will have to maintain digital records and electronically submit their VAT returns to HMRC. For each individual company in Gold with it’s own unique VAT registration number, there will be an inbuilt link to submit VAT Returns to HMRC. This is phase one of a two-phase process. The second phase, involving corporation tax, won’t start until April 2020. As a result, we are currently focusing on phase one.
What changes will be made to Gold?
For our v7.14 release, available in August, we are providing a VAT Health Check feature. There are specific criteria for the new VAT Return. This feature will help you ensure that your source data is correct and it is being made available well in advance of the MTD deadlines to give you ample time to address your company set-up before your first online submission.
The VAT Health Check looks at 9 key areas, including the Company Control File, VAT Rates, standard journals, customer and supplier accounts. The VAT Health Check will highlight anything that might need to be checked. A factsheet has been produced to give full information on the VAT Health Check, this is available on the Ibcos website via this link.
Later this year, we plan to make the new VAT Return electronic submission available in v7 and v6.4. You will then be able to electronically submit the VAT Return to HMRC. We’ll provide you with more details closer to that time.
If your business operates multiple companies with the same VAT registration number or multiple accounting systems, third-party software will be required to consolidate the values together for submission. HMRC will be publishing a list of products that can be used.
The changes made to Gold will not apply to cash accounting systems. If your business operates under cash accounting rules, you will need to submit your return outside of Gold using third-party software.
What do you need to do?
The first task after loading the v7.14 update will be to check all existing Zero Rated or Exempt VAT Rates to ensure the correct VAT Type has been selected. This needs to be carried out as soon as possible and before running a VAT return. For example, zero-rated sales/purchases to an EU country are categorised differently on the VAT return from the zero-rated UK transactions.
Then the VAT Health Check should be run to identify any other areas that may need to be checked and corrected. This should be done as soon as possible in order to ensure your company is ready for VAT Return processing.
Internal processes will also need to be examined. For example, it will be necessary to close the nominal month end for the period before a VAT return can be finalised and submitted. This could also have a significant impact on year-end processes.
We will provide more information on system changes at a later time. We will also be running a series of webinars later in the year to show you the process changes and how they might affect your business.
VAT payment deadlines
The HMRC standard deadline for payment of VAT is one month and seven days after the end of the VAT period. More information on deadlines is available right here.
In practice, the VAT return for the period of April 1st 2019 to June 30th 2019 is due for payment by August 7th 2019. This deadline may have an impact on your current monthly and year-end accounting procedures.
Need more details?
To get more information on how MTD will affect your business and what actions you should take, be sure to check out these HMRC and government webpages.