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New HMRC guidance on Making Tax Digital

New HMRC guidance on Making Tax Digital

This guidance is directly aimed at businesses who will be impacted by MTD for VAT, currently expected to be introduced from April 2019.

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Chris Downing

Partner, Tax

KPMG in the UK

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On 17 September HMRC published new Making Tax Digital (MTD) guidance aimed directly at affected businesses. This includes those for whom MTD will be mandatory when it is implemented in April 2019 and any that may wish to volunteer for it. Although the title refers rather confusingly to VAT businesses and other VAT entities, the language of the actual document is both simple and clear. It sets out what will need to be done to be ready for MTD in April 2019. The guidance is very much focused on obtaining the MTD compatible software that will be needed, including ‘bridging software’ which it is expected many businesses will use to submit VAT returns.

Many businesses currently maintain digital records (either an accounting package or spreadsheets) and use a spreadsheet to perform the final calculations for their VAT returns. Currently those final VAT numbers are then keyed in manually to the ‘9 box return’ on the HMRC portal but, when MTD is introduced, this manual process will need to be replaced by a digital link. The simplest solution for many businesses in this position will be to use ‘bridging software’ to provide the final digital link from the 9 box return numbers on the spreadsheet to HMRC systems. Digital submission of the VAT return will be required immediately once MTD is live as no soft landing period will apply to this, unlike the MTD requirement for digital links between different parts of the accounting records where HMRC are allowing an extra year for businesses to be fully compliant.

KPMG in the UK is an HMRC recognised software supplier supporting MTD for VAT and, as part of this, we have developed KPMG Tax Bridge which can provide the final digital link from a spreadsheet to HMRC systems allowing digital submission. For partly exempt MTD businesses, and to help address the requirement for digital links within the VAT return process, our long-standing product PX Cube is also available. If you would like more information about KPMG Tax Bridge or PXCube please speak to your usual contact. To read HMRC’s newly published guidance please click here.

For further information please contact:

Chris Downing

Peter Dylewski

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