Off to a seemingly poor start because the MTD document released today is surely ambiguous. Unincorporated businesses are required to comply from:
1. April 2018 if turnover exceeds the VAT threshold.
2. April 2019 if turnover is below the VAT threshold.
3. April 2019 if they are VAT registered.
Surely an unincorporated VAT registered business with a turnover of (say) £100000 satisfies both 1 and 3 above . So do they comply from April 2018 or April 2019?
Who drafts this stuff?
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Maybe they're funeral directors.
Actually, option 3 is registered for VAT and paying VAT.
Option 3 is for companies registered for VAT
....and paying VAT.
As opposed to claiming it back.
Which will be jolly interesting if a trader sometimes pays, sometimes reclaims.
Once they make a payment they will be subject to MTD.
I fail to understand why VAT refunds should be different though.
It would be a lot better for accountants if they transitioned over several years so they could provide more help to their clients rather than rush them into it.
Well. here is Jan 2017 version:
April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs)
April 2019 if they are registered for and pay VAT
April 2020 if they pay Corporation Tax (CT)
And here is today:
April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
April 2019 if they are registered for and pay VAT
from April 2020 if they pay Corporation Tax (CT)"
Clear as mud.
HMRC has set dates for moving taxes to MTD rather than moving distinct groups of taxpayers.
So self-assessment was due to start in April 2018, but this has now been split between 2018 and 2019 depending on the turnover level.
VAT is due to be moved across in April 2019. This means both unincorporated and incorporated businesses will need to submit VAT Returns via the MTD system from that date.
Corp tax is due to be moved as from April 2020, even though many companies will already have been using MTD to file VAT Returns by that date.
"VAT is due to be moved across in April 2019. This means both unincorporated and incorporated businesses will need to submit VAT Returns via the MTD system from that date."
Yes, I just realised that today!
"VAT is due to be moved across in April 2019. This means both unincorporated and incorporated businesses will need to submit VAT Returns via the MTD system from that date."
Yes, I just realised that today!
.............and at that point onwards (April 2019) Vat will need to be submitted and paid before the month end to tie in with MTD guidelines.
petersaxton wrote:
"VAT is due to be moved across in April 2019. This means both unincorporated and incorporated businesses will need to submit VAT Returns via the MTD system from that date."
Yes, I just realised that today!.............and at that point onwards (April 2019) Vat will need to be submitted and paid before the month end to tie in with MTD guidelines.
So the time limit's shortened by a week ?
So, I guess that means limited companies (like my day job) will need to 'invest' in whatever software is required to file the VAT return in advance of the time for using the software for the rest of MTD the following year.
A shame - because online filing of VAT currently is nice and easy.
So the time limit's shortened by a week ?
Not really - just reinstated to what it was previously. The 7-day extension was introduced to encourage online filing and electronic payment before they became mandatory, and will therefore be obsolete.
As far as most of my clients are concerned, they still think that the deadline is the month end.
lionofludesch wrote: So the time limit's shortened by a week ?
Not really - just reinstated to what it was previously. The 7-day extension was introduced to encourage online filing and electronic payment before they became mandatory, and will therefore be obsolete.
As far as most of my clients are concerned, they still think that the deadline is the month end.
By "not really", you mean "yes", I take it.
So that's even more work we have to cram in to four months of the year.
If you don't mind surcharges/penalties for late returns it's not my place to tell you otherwise.
That all now sort of makes sense- I have spent this afternoon having a wood and trees experience.
You may well be right (probably are) - but there are other possible interpretations. The wording is indisputably ambiguous and requires clarification before anyone can proceed with any certainty.
I received this e-mail from [email protected] which seems to confirm that businesses (presumably only unincorporated ones) above the VAT registration threshold commence MTD from April 2018.
Extract below: -
Summary of change
The government has decided to provide 3.1 million small businesses with more time to prepare for Making Tax Digital. Businesses (including the self-employed and landlords) that have annual turnover below the VAT registration threshold will have an extra year before they are required to keep records digitally and send HMRC quarterly updates, although they will be able to start doing so voluntarily from April 2017.
Those with annual turnover above the VAT threshold will still be required to keep digital records and send HMRC quarterly updates from April 2018 and the public beta testing will start, as planned, from April 2017. The exemption threshold, previously announced, will remain at £10,000.
Why the change?
Businesses that have annual turnover below the VAT registration threshold are currently less likely to keep digital records than larger businesses. Whereas businesses that are VAT registered already engage with HMRC on a quarterly basis online and so are better placed to make the transition to keeping digital records and updating HMRC quarterly. This was recognised by a number of respondents to our consultations.
The extra year will also allow HMRC to deliver targeted support for small businesses such as guidance and online training.
Next steps
From April this year, HMRC will begin its Making Tax Digital pilot with businesses and tax agents to learn what works well.
We will expand our initial user software testing with hundreds of thousands of businesses expected to be involved by April 2019. In this way we can all ensure the new software is user-friendly, works well with HMRC’s systems and give individuals and businesses time to prepare and adapt. We will also test our support model during this period."
Ok, im still none the wiser after reading this thread.
So does April 2018 MTD filing apply to unincorporated businesses which are over the VAT threshold and also registered for VAT?
Does April 2019 just subsequently bring in those unincorporated VAT registered businesses which were voluntarily registered?
I thought I knew but now I'm not so sure.
With a bit of luck, HMRC will let us know with a letter or summat.
Just watched an MTD webinar by the ICAEW...
In the example they gave, someone with £40k rents and £60k business turnover would be within MTD as of April 2018.
Assuming that the ICAEW are correct, then the HMRC reference to VAT and April 2019 threshold, is just for traders who are below the VAT threshold who are voluntarily registered.
Please see my comment of 8 March at 16:08.
There's not one big "MTD" that taxpayers are being moved to in stages. Different taxes are being added to the MTD system at different times, so more than one deadline may be relevant for each person or business.
