If MTD for VAT affects you, don’t panic. Here is a simple plan to get you ready for 1st April.
Plan Stage One: Get an Online Government Gateway Account
If you’re already VAT registered, chances are you already have one of these - it’s what you currently use to log into HMRC’s VAT Online Service.
If you haven’t already got one, set this up first.
To do this, go to https://www.gov.uk/government-gateway
You’ll be asked to create a password and you’ll be given a user ID.
Other than the obvious (name, date of birth, email), you’ll need your National Insurance number to hand.
You should do this as soon as possible. HMRC send your activation code by post and you can’t complete the setup until you have received it.
Plan Stage Two: Work out when you’ll have to submit your first MTD VAT Return
MTD for VAT comes into force on 1 April 2019, so your first VAT Return after that date will be the first you make under the new scheme.
Plan Stage Three: Set up your Accounting Software
Unlike they did with payroll, HMRC won’t be providing their own free software, so you will either need to use a compatible Cloud Accounting package or a combination of spreadsheet/s and compatible bridging software to submit your figures.
Here again is HMRC’s list of compatible providers, including those who are working to be compliant for April.
The list contains most of the leading Cloud Accounting providers, including Quickbooks, FreeAgent, Xero and Sage. It also details what each of the services offers within their platform.
Sadly for those using the free cloud accounting service Wave, it is not currently on either list.
There will be a “soft landing period” of one year following the introduction of MTD for VAT, during which time businesses will be able to manually fill in the 9 VAT boxes on a spreadsheet which can then be linked to HMRC using simple bridging software.
However, from 1 April 2020, the data must be digitally linked. This will either require a more sophisticated combination of spreadsheet/s and bridging software which are yet to be confirmed, or a move at that stage into a cloud accounting package.
Because of this, our considered advice to clients is to choose a simple, compatible cloud accounting package now.
Though this may seem daunting at first, the leading packages offer lots of free training and online help to help you get set up. And, despite the initial learning curve, time-saving features such as recurrent invoicing, automatic bank feeds and automated invoice reminders might just prove to be a revelation.
If you have an Accountant, it’s best to check with them which they suggest. If you’d like to chat things through with one of our Tax or Accountancy experts, just email us at email@example.com or call 0845 6711105.
Plan Stage Four: Practice makes perfect
If you have everything set up, a VAT period in between now and the 1 April and the desire to just get on with it, you might be eligible to join the pilot scheme and begin filing under the new rules.
That way, you can make sure you’re ahead of the game when MTD becomes mandatory.