Making Tax Digital for VAT

making-tax-digital-for-VAT-update

HMRC has revealed guidance to check when a business must follow the rules for Making Tax Digital for VAT.

HMRC has announced that due to coronavirus (COVID-19), the businesses can delay (defer) any VAT payments due between 20 March 2020 and 30 June 2020. If they choose to defer a VAT payment, they will have until 31 March 2021 to pay it. Most businesses must keep digital VAT records and use software to submit VAT Returns.

Businesses can find out if and when they need to start keeping digital records, sign up and submit a return using the software.

The rules for Making Tax Digital for VAT

If you’re a VAT registered business with a taxable turnover above £85,000, you must follow the rules for Making Tax Digital for VAT unless:

  • your business uses the VAT GIANT service – HMRC will contact you to tell you when the deadline is
  • you apply for an exemption

You can choose to follow the rules voluntarily.

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When to start keeping digital records

If HMRC has sent you a letter to tell you you’re in the deferral group, start keeping digital records from your first VAT Return period starting on or after 1 October 2019.

If not, keep digital records from your first VAT Return period starting on or after 1 April 2019.

When to sign up

You must sign up before your first return is due after either:

  • 1 April 2019
  • 1 October 2019 if you’re in the deferral group

If you do not pay by Direct Debit, sign up at least 72 hours before your return is due.

If you pay by Direct Debit, sign up at least 7 working days before or 5 working days after your return is due. Make sure your last Direct Debit has come out of your bank account before signing up.

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When to submit a VAT return using software

Use software to submit your first return due after either:

  • 1 April 2019
  • 1 October 2019 if you’re in the deferral group

The deadlines and frequency of your returns will not change after you sign up. To see when your next return is due, sign in to your VAT online account.

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