As a result of the UK government initiative known as Making Tax Digital (MTD), all UK VAT registered businesses will have to maintain digital records and electronically submit their VAT returns to HMRC from April 2019. For each individual company in Gold with its 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?
We have provided a VAT Health Check feature, already available in v7.14 and v7.15. The feature will be provided in v6.5, due for release by the end of 2018. There are specific criteria for the new VAT Return and this feature will help you ensure that your source data is correct. 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, and Customer and Supplier Accounts. The VAT Health Check will highlight anything that might need to be checked or amended. A factsheet has been produced to give full information on the VAT Health Check – this is available on the Ibcos website via this link.
In quarter 1, 2019, the new VAT Return electronic submission will be available in v6.5 and v7.16. You will then be able to electronically submit the VAT Return to HMRC via Gold. We’ll provide you with more details closer to that time.
If your business operates multiple companies with the same VAT registration number or uses multiple accounting systems, you have a couple of options: Gold will provide the ability to make adjustments at a high level and this method could be used to enter information for another company to include in the single VAT return. Alternatively, third-party software could be used 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?
If you haven’t already, you will need 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 to show you the process changes and how they might affect your business:
- Webinar 1: An overview of MTD – 26th November
- Webinar 2: Health Check – 6th December
- Webinar 3: VAT Return – 13th December
All webinar recordings will be available on our website.
If you are running Gold v7 or Gold v6.4, update discs will be sent out automatically when the VAT Return is available.
If you are on Gold v6.3 or earlier, you will need to upgrade to Gold v7. To discuss this further, contact the sales team on 01202 714200 or via email: sales@Ibcos.co.uk
VAT payment deadlines
Making Tax Digital begins on your first complete VAT period starting after 1st April 2019. From this date it will be mandatory for you to submit your tax returns digitally to HMRC.
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 1st April 2019 to 30th June 2019 is due for payment by 7th August 2019. Please be aware that the 1st April 2019 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.