The end of the VAT return!
HMRC are bringing in their version of digital accounting for VAT from 1 April 2019.
Although this will just cover VAT to start with, HMRC’s aim is to roll out digital reporting via their ‘Making Tax Digital’ initiative, to eventually cover the full suite of business taxes. The ultimate aim; to make tax reporting more efficient and transparent for taxpayers and advisers alike, and to reduce the likelihood of processing errors.
As the legislative process has progressed, the finer points of the new digital VAT regime have emerged. Currently 90% of all VAT returns are submitted through HMRC’s online VAT filing service. However, from 1 April 2019, this service will no longer be available for businesses with turnover above the VAT threshold.
These businesses will either need to use HMRC approved accounting software to submit their VAT returns digitally, or appoint an adviser to do so on their behalf. For these businesses that still calculate and submit VAT on spreadsheets, this has caused some obvious concern – does the new regime rule out spreadsheets altogether? The answer thankfully, is no, as recently clarified by HMRC.
Businesses using spreadsheets will be able to continue to use them to report VAT after 1 April 2019, providing they are used in conjunction with a solution that can report digitally to HMRC.
What this means in practice is that businesses will be allowed to use ‘bridging software’ solutions, to translate and report their VAT spreadsheets into a digital format that is accepted by HMRC, and still remain within the rules.
Roffe Swayne can provide advice and support on making the transition to digital VAT reporting.