The Finance Bill 2017 proposes HMRC powers to introduce regulations for businesses with turnover above the VAT threshold to keep records digitally (for VAT purposes only) and to submit VAT info to HMRC through MTD compatible software from April 2019.
MTD will also be available on a voluntary basis for other businesses.
The Finance Bill 2017 is making its way through parliament, but has yet to receive Royal Assent. The proposed legislation includes Clause 62 which:
a) Gives HMRC powers to make regulations requiring the submission of information relating to VAT
b) Gives HMRC powers to make regulations that specify the form in which records are kept and preserved
c) Where regulations are made that require records to be kept and preserved digitally, gives HMRC the powers to specify how digital records are kept and the conditions that must be complied with.
d) Where these powers are used to require records to be kept and preserved in a digital format, provides an exemption for businesses with a turnover below the VAT registration threshold.
e) Ensures that, once a business is required to keep digital records, this requirement remains in place even if that businesses turnover falls below the threshold and that person remains registered for VAT.
f) Gives HMRC the power to vary the exemption provisions, in the case of transfers of a going concern, and add further exemptions in the future.
g) Gives a right of appeal against HMRC decisions about the application of regulations relating to VAT requiring the use of digital communications or digital record-keeping.
h) Ensures that regulations providing for digital record keeping can’t come into force before 1 April 2019.
The Government and HMRC remain committed to the Making Tax Digital project. Although the regulations will not come into force until April 2019, we are encouraging clients to move to digital record keeping at the earliest opportunity. This will ease the transition to complying with HMRC regulations in the future. We can help you with this transition, from providing basic spreadsheet templates to suggesting suitable software or providing a full online bookkeeping service.