This document provides information about Making Tax Digital (MTD) for VAT in the UK. MTD will require businesses to keep digital records of VAT transactions and submit VAT returns to HMRC using compatible software. It will affect VAT registered businesses with turnover above the VAT threshold starting in April 2019. The document outlines the key requirements of MTD including what transactions must be recorded digitally and explains the VAT pilot program. It also provides links to guidance on software, notices, and how agents can help clients transition to the new system.

1. Making Tax Digital for Business
Verna Gellvear
Customer Readiness and External Stakeholder Team
September 2018
Keytime Events

2. Purpose of this event
 To help you prepare for MTD for VAT
2
o Background on Making Tax Digital for Business
o Requirements for MTD VAT
o MTD VAT Pilot

3. Our Vision
MTD is making fundamental
changes to the way the tax system
works – transforming tax
administration so it is
more effective,
more efficient and
easier for taxpayers to get it right
3

4. Why Make Tax Digital?
44
A digital future is what most customers expect
Accounting Software can help to integrate tax
into business processes and financial planning
Helping businesses ‘get it right first time’
will reduce tax lost through error
HMRC provided
1.1million small
business customers
in 2014/15 with
digital assistance
2million small
businesses use
accounting or
filing software

5. Scope of Making Tax Digital
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MTD for business
Income Tax - Self Assessment
 sole trader/self employed
 landlords
VAT
Corporation tax
MTD for individuals
Improving PAYE
through real-time
triggers
Simple Assessment
Bank and Building
Society Interest
Business
tax
account
Personal
tax
account
Timing Unchanged

6. 6
May 2016 ITSA
Private Beta
launched
March 2018
ITSA Public Beta / ongoing pilot
ITSA
VAT
CT
April 2016 April 2017 April 2018 April 2019 April 2020
Winter 2017/18
VAT Technical
Private Beta
April 2019
Vat Service Go
Live
(for those >VAT
threshold)
April 2020
Potential
mandation for
some/all of ITSA
April 2017 ITSA CGL
launched
April 2020
Potential
mandation (for
<VAT threshold)
Spring 2018
VAT Public
Beta
Timings for CT to be confirmed
October 2017
Design, Policy,
Legislation
April 2020
Potential mandation
for CT
Legislation
Timing

7. Get Ready!
“what I’m very keen to signal to
everybody out there… is that we are
serious about it and it will happen, so
there will be no question of any further
delay on this, so we all need to make
sure that we’re ready for it.”
Mel Stride MP - Financial Secretary to the Treasury
Minister of State with responsibility for Value Added Tax
7

8. What is Making Tax Digital?
Capturing transactions digitally in
record-keeping software
•as near to real time as possible
Summary updates submitted to HMRC
via MTD compatible software
8

9. • HMRC providing Application Programming Interfaces (APIs) – not our own
software solution.
How we’re delivering

10. Who is affected – and when?
 April 2019 - VAT Registered businesses with
turnover above the VAT threshold
 VAT businesses below £85,000 –
MTD Voluntary
 Limited exemptions
 MTD for other taxes not before 2020
10

11. What is changing for VAT?
Things that will change
 VAT returns compiled by pulling data from
digital records
 VAT returns sent to HMRC via API-enabled
products and not through VAT portal
Things that won’t change
 VAT return frequency and payment deadlines
 Eligibility for VAT Special Schemes
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12. Data that must be recorded digitally
Designatory data
 business name
 address
 VAT registration number
 A record VAT accounting schemes
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For each supply made
 The time of supply
 The value of the supply
 The rate of VAT charged
There must be record of outputs split
between
 standard rate
 reduced rate
 zero rate
 exempt and outside the scope.
For each supply received record
 The time of supply
 The value of the supply including any VAT
that is not claimable
 The amount of input tax that will be
claimed.
If more than one supply is on an invoice
record the totals from the invoice.
Adjustments
 Total for each type - but not
calculations

13. MTD ‘Compatible Software’
Program, or set of compatible software programs, that must
Keep digital records
provide HMRC information and returns using APIs
receive information from HMRC using APIs
If a multiple software is used, there must be a digital link
between the products.
Software includes spreadsheets!
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14. Example 1
Software
•to record sales and purchases
spreadsheet
•to calculate the return
bridging software
•to submit the return
All links must be digital
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15. Example 2
15
 Software to
• record sales and purchases
• calculate the return
• submit the return
 spreadsheet to
• track of fleet of cars and
work out adjustments for fuel scale charges
OK to type adjustment into accounting software.
But a digital link may reduce errors

16. VAT Pilot
Started in April 2018
Simplest businesses first
More complex businesses join as the pilot grows
Must have compatible software to take part
Speak to your software supplier
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17. Joining the pilot
17
makingtaxdigital.mailbox@hmrc.gsi.gov.uk

18. VAT information
18
Help you prepare for April 2019.
Recently published
o New VAT Notice
o List of software
developers
o Communications pack

19. VAT information – VAT Notice
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Gives legal information. Explains
o Who is effected
o Keeping digital records
o Sending VAT returns

20. VAT information - software
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List of Software suppliers who have
o tested their products in our test environment
o demonstrated a prototype of their software to us

21. VAT information – Communication Pack
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For anyone who wants to find
out about MTD.
Can use the contents for your
own communications activity
and key messages for clients,
colleagues customers or
members.

22. 22
Set up your agent services account
https://www.gov.uk/guidance/get-an-hmrc-agent-services-account

23. 23
https://www.gov.uk/guidance/get-an-hmrc-agent-services-account
Set up your agent services account

24. 24
https://www.gov.uk/government/publications/agent-update-issue-66
Agent Update 66

25. 25
Account number

26. This is on your Agent Services Account page
26
Account number

27. 27
Your existing client relationships

28. 28
Signing up existing clients to MTD
www.gov.uk/guidance/agents-use-software-to-send-income-tax-updates

29. 29
Linking your software to HMRC
HMRC
MY AGENCY
SOFTWARE

30. 30
Thank you for listening
https://www.gov.uk/government/publications/vat-
notice-70022-making-tax-digital-for-vat
https://www.gov.uk/government/publications/softwar
e-suppliers-supporting-making-tax-digital-for-vat