MTD Key Points

Here is a summary of the key points to remember for Making Tax Digital ( MTD ) for VAT purposes:

  1. MTD takes effect for VAT return periods beginning on or after 1st April 2019.
  2. A business that is voluntarily registered does not need to join MTD this year.
  3. Once a business has joined MTD it cannot subsequently leave, even if the turnover falls below the £85,000 threshold.
  4. A business can adopt either a full accounts software package, or use spread sheets with bridging software.
  5. Each invoice must be digitally recorded ( but this does not mean that invoices have to be raised electronically…….they could be handwritten ).
  6. Purchase invoices should be recorded showing the total value plus the input tax claimed.
  7. There is no need to digitally record transactions that are excluded from VAT returns such as wages and drawings.
  8. Sales invoices should record the net figures, and the rate of VAT.
  9. For both sales and purchases, the processing date will be the invoice date unless the business uses the cash accounting scheme, when the payment date is adopted.
  10. Each individual invoice must be recorded in digital format. It is not acceptable to batch invoices together and make one entry based on a payment or statement total.
  11. A transaction does not have to be recorded digitally if this would be ” impossible, impractical, or unduly onerous “. HMRC have confirmed that this would apply to employee expenses for example.
  12. Businesses involved with MTD must submit their returns through HMRC’s Application Programme Interface ( API ).

Making Tax Digital Update

Making Tax Digital ( MTD ) for VAT is almost upon us. It is effective from the first VAT return starting on or after 1st April 2019, for those VAT registered business with a turnover in excess of the £85,000 compulsory registration threshold. Businesses should now be planning to sign up with HMRC in order that they can comply with the new requirements.

Once signed up, HMRC will expect the next VAT return due to be submitted under MTD, so it is vital to sign up at the correct time.

Do not sign up to submit the current period VAT return until the previous period’s VAT return has been submitted.

The following assumes that previous VAT returns have been filed on time, and are up to date. The sign up process is set into 3 stagger dates, and it is assumed here for this notice purpose that the business does not want to sign up for the pilot submission of VAT returns. If you do want to sign up for the pilot submissions ( ie submitting the VAT return under MTD before it is necessary ) then please speak to our office.

  1. For the first mandated period covering the 1st April to 30th June 2019 VAT return, then only sign up once the March 2019 return has been submitted. If you do not have a direct debit set up, then you should sign up between 8th May and 4th August 2019. If you do have a direct debit set up, then you should sign up between 15th May and 17th July 2019.
  2. For the first mandated period covering the 1st May to 31st July 2019 VAT return, then only sign up once the April 2019 return has been submitted. If you do not have a direct debit set up, then you should sign up between 8th June and 4th September 2019. If you do have a direct debit set up, then you should sign up between 15th June and 15th August 2019.
  3. For the first mandated period covering 1st June to 31st August 2019 VAT return, then only sign up once the May 2019 VAT return has been submitted. If you do not have a direct debit set up, then you should sign up between 8th July and 4th October 2019. If you do have a direct debit set up, then you should sign up between 13th July and 16th September 2019.
  4. For monthly VAT returns, the first mandated period will be for the VAT return to 30th April 2019. Only sign up once the March 2019 VAT return has been submitted. If you do not have a direct debit set up, then you should sign up between 8th May and 4th June 2019. If you do have a direct debit set up then you can only sign up on either the 15th or 16th May 2019.

 

 

December 2018 Fuel Rates

HMRC have announced new fuel rates for journeys on or after 1st December 2018. For 1 month from this date, either the new rates or the old rates can be used. Hybrid cars, for this purpose, are treated as petrol or diesel cars. A fully electric car has a 4p per mile advisory fuel rate, even though electricity is not a fuel. These fuel rates can also be used for VAT purposes, but the employer must keep supporting receipts of the VAT claimed.

The new rates are :

Petrol   :  engine size 1,400cc or less 12p ; 1,401cc to 2,000cc 15p ; over 2,000cc 22p.

Diesel   :  engine size 1,600cc or less 10p ; 1,601cc to 2,000 cc 12p ; over 2,000cc 14p.

LPG     :  engine size 1,400cc or less 8p    ; 1,401cc to 2,000cc 10p ; over 2,000cc 15p.

Late Tax Returns

The 2018 self assessment tax return deadline of 31st January 2019 has now passed. If you have not yet submitted your tax return for that year, then you will receive an automatic late filing penalty of initially £100.

The penalties will continue to increase over time, the longer the delay in submission of the tax return continues.

In addition to the late filing penalties, there will also be additional interest charged on any tax paid late. Furthermore, there will be 5% penalty surcharges added to the amount payable, if the balancing payment for 2018 is not made by the 28th February 2019. Again, interest will continue to accrue on a daily basis, and the penalty surcharges will also continue to increase over time.

If you have not yet done so, then we strongly recommend that you bring your tax affairs up to date, and ensure that any outstanding tax returns are dealt with and submitted to HMRC as soon as possible.