Making Tax Digital (MTD)

Making Tax Digital (MTD) requires VAT registered businesses with a turnover of £85,000 to file their VAT returns digitally through an approved accounting .

The £85,000 refers to your sales income and not your profit so this is the first thing to be aware of.

Businesses that also fall into this bracket also have to record and maintain digital records. For many the thought of no longer having to keep filing cabinets in every spare room of your house is a huge advantage to the new way or working. Records should be now being kept safe in the cloud digitally where they are easily accessible at any point in time.  

Thinking you may have gone over the VAT threshold recently? When the threshold is exceeded for the first time, businesses must comply with VAT from the beginning of its next VAT accounting period. Please see the below table to see when you need to check your taxable turnover between and when your first MTD VAT return will be required if you have exceeded the £85,000 limit within this period.

VAT Stagger Group – Mar/Jun/Sep/Dec

Check taxable turnover for – Quarter ended 30 June 2019

First MTD VAT return – 12 months ended 31 March 2019

VAT Stagger Group – Apr/Jul/Oct/Jan

Check taxable turnover for – Quarter ended 31 July 2019

First MTD VAT return – 12 months ended 31 March 2019 and 12 months ended 30 April 2019

VAT Stagger Group – May/Aug/Nov/Feb

Check taxable turnover for – Quarter ended 31 August 2019

First MTD VAT return – 12 months ended 31 March 2019 and 12 months ended 30 April 2019 and 12 months ended 31 May 2019

Many businesses are also unsure of when the MTD deadline relates to them. What if their VAT return runs over the April 2019 deadline? The golden rule is businesses will have to comply with MTD regulations and submit their returns from the start of their first VAT return period beginning before or after the 1st April 2019. Please see the below table to illustrate this point.

First mandatory MTD for VAT return period – 1 April 2019 – 30 June 2019

Digital accounting records must be kept from – 1 April 2019

Deadline for filing mandatory MTD for VAT return – 7 August 2019

First mandatory MTD for VAT return period – 1 May 2019 – 31 July 2019

Digital accounting records must be kept from – 1 May 2019

Deadline for filing mandatory MTD for VAT return – 7 September 2019

First mandatory MTD for VAT return period – 1 June 2019 – 31 August 2019

Digital accounting records must be kept from – 1 June 2019

Deadline for filing mandatory MTD for VAT return – 7 October 2019

(Any return period’s that run over April 2019 e.g. 1 February 2019 – 1 April 2019 or 1 March 2019 – 1 May 2019 will not be required to file under MTD until the next VAT quarter.)

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