Is it too soon for lawyers to consider Making Tax Digital for VAT?
Wednesday, 11 July 2018
If you’re compulsorily VAT registered, from 1 April 2019, your business must comply with new Making Tax Digital for VAT rules or potentially face fines of up to 15% of your annual VAT bill under the default surcharge regime.
Although just a few months away, it seems that few legal software suppliers are taking this seriously. The concept is a simple one; all of the records must be digital and the submission of the return will no longer be submitted through your government gateway account. Instead, you must use software that is able to communicate with HM Revenue & Customs.
VAT registered taxpayers covered by Making Tax Digital for VAT will no longer be able to maintain manual records in any part of their accounting system. For those who use software and spreadsheets, digital links must be in place by 1 April 2020 to transfer data between each function. It will no longer be acceptable to manually re-key data from one system to another.
What should you do now?
- Designate someone to understand how Making Tax Digital for VAT affects you.
- Speak to your software supplier. A lot of legal practice management software concentrates on the day-to-day operation and doesn’t often see the accounting side as a priority. The generic software packages that now comply have not found this process easy. So:
- Find out if your software is sufficiently up to date as it’s often only the latest versions that will comply.
- Review how you prepare your VAT return and identify the parts that might need to change (i.e. anything manual).
- Ascertain when the Making Tax Digital for VAT version is due for release and make sure you’ll have time to test it prior to having to use it.
- Tell us how you’re getting on. There will be common issues that we’ll be able to help you work around.
There’s considerable uncertainty around lots of government policy at the moment, but this is definitely heading our way and there are going to be a lot of people who will be caught out by this, so the sooner you prepare, the easier and cheaper the transition will be.
For more information on how we can help, please speak to your usual MHA Larking Gowen contact.
Call 0330 024 0888 or email firstname.lastname@example.org.