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UK MTD VAT delay - early upgrades required

  • Feb 8, 2018 | Richard Asquith

UK MTD VAT delay - early upgrades required

The latest VAT implementation date for the UK's Making Tax Digital, 1 April 2019, means most resident and non-resident businesses will be forced into preemptive accounting system changes in 2018.

MTD – 1 April 2019 VAT filings

MTD will require all VAT registered businesses to record all transactions digitally. In addition, they must then submit their VAT return data digitally, too, via a new API interface with HMRC. This latter requirement will oblige an upgrade of accounting system.

However, thousands of micro-businesses maintain their accounting transactions in a spreadsheet – with no accounting package. HMRC will require such businesses to buy or build an automated API access between these spreadsheets and HMRC systems.  The same requirement will apply to larger businesses which first consolidate in a spreadsheet their group VAT transactions before manually entering in the HMRC VAT Portal.

UK accounting and tax year end split creates problem

In the UK, companies and private individuals may have year-end accounting dates at any month end date of their choice. The most popular date is 31 December. However, the company tax year end is 31 March, and personal tax year end is 5 April.  The new MTD regime launch date has now been set at 1 April 2019 to co-ordinate with these tax year ends.

To avoid a complex mid-year accounting package upgrade, this means that businesses will have to upgrade systems for MTD at their accounting year end prior to 1 April 2019. For example, businesses with a 31 December year end will have to implement their MTD-enabled solution for 1 January 2019 – 3 months early.

Since the detailed MTD requirements are not yet available or fully tested, vendors of accounting packages are not able to confirm if they can mitigate the above problems.  HMRC has indicated that further details will be available from April 2018, including a test pilot programme.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.