Making Tax Digital for VAT

Frequently Asked Questions

Last Updated: 13th March 2019

In December 2015, the UK government published a roadmap for a transformed tax system called "Making Tax Digital". This outlined their plans for making the administration of tax "more effective, more efficient, and simpler for tax payers".

At this time, the only part of the roadmap being implemented is for VAT.

Does MTD apply to Me?

Businesses with annual turnover in excess of the VAT registration threshold, £85,000, will need to submit their VAT Returns via the system for periods from 1st April 2019.

The only exceptions are if HMRC is satisfied that

  • a business is run entirely by members of a religious society whose beliefs are incompatible with the regulations (for example, where those beliefs prevent the use of computers)

    or
  • it is not reasonably practical to submit returns via MTD (for example, due to age, disability or remoteness of location)

    or
  • the business is subject to an insolvency procedure.

Businesses with more complex VAT situations have been deferred for six months, until October 2019. This applies to:

  • trusts
  • 'not for profit’ organisations that are not set up as a company
  • VAT divisions
  • VAT groups
  • public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
  • local authorities
  • public corporations
  • traders based overseas
  • those required to make payments on account
  • annual accounting scheme users

How does this affect axis diplomat users?

In July of last year we confirmed our commitment to providing support in axis diplomat for Making Tax Digital for VAT in readiness for the April deadline as standard in all versions within mainstream support (axis diplomat 2016 and above).

An essential part of MTD is digital record keeping - from April, all companies registered for UK VAT need to keep records digitally for a minimum of six years, effectively mandating the use of accounting software. axis diplomat 2016 and above have been extended where necessary to provide the necessary support for MTD, ensuring that both the digital record keeping and online submission facilities meet the requirements.

Versions of axis diplomat prior to axis diplomat 2016 do not have the functionality required for compliance with MTD; we recommend discussing your requirements with us at the earliest opportunity. To keep informed on this and other related topics, please ensure that you subscribe to our Software Newsletter or follow us on Twitter.

What changes are being made to axis diplomat?

A separate section of this website, axis diplomat and Making Tax Digital for VAT describes the functionality that has been added. These enhancements are available in axis diplomat 2016 and axis diplomat 2018 software releases from 7th March 2019.

As and when software developments are made available, this website will be updated and details released via Twitter.

Can I use a Spreadsheet and Bridging Software?

A number of software developers have released "Bridging Software" that allows figures held in a spreadsheet (typically Microsoft Excel™) to be sent to HMRC via Making Tax Digital.

HMRC have allowed an exception within the Soft Landing Period (effectively the first twelve months of mandatory MTD reporting) to allow Copy and Paste as a legitimate digital link. This is detailed in VAT Notice 700/22:

The following rule has the force of law:

A digital link is an electronic or digital transfer, or exchange of data, between software programs, products or applications.

The use of ‘cut and paste’ or ‘copy and paste’ does not constitute a digital link - except during the soft landing period as set out in paragraph 3 of the next ‘force of law’.

Our understanding of this rule is that, for the soft landing period only, you would be allowed to copy and paste figures from axis diplomat into a spreadsheet and use bridging software to submit the VAT Return but you could only do this if the figures in axis diplomat were correct in the first place - any adjustment of figures within the spreadsheet prior to submission would breach the digital record keeping aspect of Making Tax Digital.

Does axis diplomat Feature on HMRC's List of Software Packages Compatible with Making Tax Digital?

Yes!

 

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