Making Tax Digital for VAT – Your update from Nomisma
17th Apr 2020
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HMRC introduced Making Tax Digital (MTD) for VAT last year on 1 April 2019 for VAT registered businesses with an annual turnover of more than £85,000. The initiative aims for HMRC to become one of the most digitally advanced tax authorities in the world.
The government’s announcement in 2017 confirmed that around 1.2 million businesses would be required to start using the service in 2019. More than 1.4 million businesses signed up for MTD by 9 March 2020 and more than 4 million VAT returns has been submitted successfully using MTD-compatible software and/or bridging software. The new digital filing initiative will help the government reduce more than £9.9 billion in lost revenue due to erroneous VAT filing.
Digital record keeping
Under the new rules, businesses with a turnover of more than £85,000 must keep digital records of their company name, address, VAT number, plus details of each sale and purchase. When preparing the VAT return these details need to be transferred to the VAT return using digital links. Manual entry, copy/cut and pasting of the data is not allowed.
The soft landing period
HMRC has given businesses time to establish digital links, meaning businesses have to try their best to comply with the new rules. This time is called the ‘Soft Landing Period’.
The Soft landing period was supposed to end on 31 March 2020 (now extended to 1 April 2021 due to COVID-19) giving businesses and accountants more time to choose MTD Functional Compatible Software.
HMRC will not charge penalties for businesses and accountants who do not have digital links in place during the soft landing period. However, this does not mean that the old style VAT returns can be submitted in place of the MTD VAT return.
Businesses could be charged penalties during the soft landing period for the following reasons:
Non-compliance of MTD for VAT filing
Not meeting digital record keeping requirements
Late payment of VAT bills
Other VAT penalties
VAT return submission containing inaccuracy knowingly or due to carelessness can result in a penalty of up to 100% of any under-stated or over claimed tax.
Paper return submission can result in a penalty of up to £400 unless exemption granted by HMRC to file an online return.
How can Nomisma help?
Nomisma is the ultimate cloud accounting suite deemed as functional compatible software for Making Tax Digital. You can maintain digital records of all your invoices and supplier bills in Nomisma’s bookkeeping module where the data is digitally stored and shared with the MTD for VAT module. All you need to do is click on the ‘Submit’ button to file your MTD VAT returns. It’s that simple!
In addition to this powerful connection, we also have our very own mobile receipt capture app helping businesses upload receipts onto Nomisma for accountants to then process those receipts. This reduces the need for paper receipts meaning faster reconciliation of data. Nomisma offers:
Free support via email, chat and telephone
Industry updates on Making Tax Digital to keep our customers well informed about any changes
Automatic reminders can be sent to customers making them aware about an upcoming VAT deadline.
Easy generation of VAT reports helping customers keep track of their VAT records and make their VAT submissions without hassle.
Why not take a trial and find out just how easy it is to file MTD for VAT returns. Contact Ash for a free demo and trial – tel: 020 3021 2326 or email: [email protected]