Blog Article

Making Tax Digital for VAT

By Jenny Strudwick

Author

By Jenny Strudwick

Senior Product Manager

Jenny is Senior Product Manager for Tax at IRIS. She has been with IRIS for over 18 years working across many different departments including Support, Engineering and now Product Management. During this time she has been instrumental in major tax changes from FBI to iXBRL and now MTD. Jenny works closely with HMRC on major changes in taxation especially now as they develop their MTD strategy. Prior to joining IRIS, Jenny spent a number of years in practice and has now accumulated over 21 years’ experience in UK taxation and tax software.

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Updated 7th July 2022 | 3 min read Published 6th April 2018

It’s been a while since we last discussed Making Tax Digital (MTD) and we have been busy working on our solutions. With the new fiscal year around the corner it’s a good time to share our progress with you.

Last year we delivered not only the ability to import client data direct from HMRC we also introduced functionality to allow our customers and their clients to take part in the HMRC pilot of MTD quarterly filing for Income Tax. While other vendors are busy talking about their roadmaps and the solution they intend to build we have already delivered it and our customers have been the first to make successful MTD submissions to HMRC.

Just as we did with FRS implementation our early delivery of MTD functionality not only gives our customers (and their clients) the time and opportunity to get to grips with a new regime and adjust process as required, it allows us time to tweak and improve the system based upon the valuable feedback we receive from those who use it.

We will continue the roll out of this functionality as and when it becomes available from HMRC, so that IRIS customers are always at the forefront of Making Tax Digital. Our aim is to make the adoption of MTD as painless as possible and deliver productivity benefits to our customers as they embark on their digital transformation.

HMRC are hoping to come out of the pilot for Income Tax MTD filing and into a public Beta very soon. The pilot is currently only open to individuals with income from only one trade and/or rental income, if you are interested in taking part and have a client (or several) that meet this criteria feel free to get in touch with me at MTD@iris.co.uk and we can get you and your client(s) subscribed and registered with HMRC

Making Tax Digital for VAT comes into force this time next year for businesses with a turnover above the VAT threshold, are you and your clients ready for the change?

According to HM Treasury there are around 1.2 million businesses with a turnover above the VAT threshold of £85k and approximately 1 million voluntarily VAT registered businesses. Additionally there are around 3.5 million business not having to register for VAT as their turnover is below the threshold.

The UK threshold of £85k is the highest in the EU and more than double the average in the EU which is around £29k.

At the autumn 2017 budget the chancellor announced that the government was not minded to reduce the threshold and confirmed that it would remain at £85k for 2 years from April 2018. Instead they would consult on whether the design of the threshold could better incentivise growth. This means that there is a good chance that the threshold or the rules around the threshold will change in April 2020.

The government has begun the consultation with a call for evidence; there are 22 questions to answer which can be found here and responses can be made either by email to vatthreshold@hmtreasury.gsi.gov.uk or by completing an online survey here. The consultation closes on 5th June 2018 so if you feel that this could impact you and your clients, now is the time to get involved and have your say.

At IRIS, we recently conducted a VAT survey with our customer base and found that more than 97% of accountants that responded to the survey said that they currently complete VAT returns on behalf of their clients. The majority of respondents said that they complete VAT returns for approximately 20% to 30% of the client base and 76% of respondents said that they currently use the HMRC’s online service.

HMRC’s free VAT online filing service will not be updated for Making Tax Digital, so this service will not be available to any business with a turnover above the VAT threshold from April 2019. Now is the time to start talking to your clients about what their options are so that you are both prepared for the upcoming changes.