10 Making Tax Digital for VAT Questions Answered

EditorM2M, Making Tax Digital

 

We spoke about Making Tax Digital back in September, yet with so many common misconceptions regarding MTD still circulating, and with less than 6 months till the VAT changes come into play, we thought now would be a good opportunity to answer some of the most commonly asked questions by businesses to help keep you abreast of the 2019 MTD initiative.

By now, you’re likely to already know the basic facts, such as;

  • When MTD is due to be implemented – 1st April 2019
  • How MTD will affect your business – customers will be unable to submit a return manually via HMRC gateway and instead will need to do so via their accounting software
  • How to remain compliant with the new changes – customers will need to upgrade to Sage 200cloud Spring 2018 release or a subsequent release in order to remain compliant

But what about the other, trickier questions that businesses are asking? From 1st April 2019, given that all businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required by law to store financial records digitally and submit VAT returns from MTD-compatible accounting software, we’ve put together 10 Q&As commonly asked by businesses up and down the country, we hope you find the answers useful;

  1. What’s happen if you don’t have Sage 200cloud Spring 2018 release?

Not all customers will be in a position to upgrade to Sage 200cloud Spring 2018 before April 2019, therefore Sage have created a new MTD Submission module to provide customers on previous versions the ability to comply with the mandate without upgrading in the short term. This is only a temporary fix, so a full upgrade is still advised.

  1. In clause 2 .1.1 HMRC states that there will be a soft landing period where businesses will not be required to have links between software programs. So, why would a customer require the MTD Submission module?

Customers don’t need to have a digital link between the software and their VAT return in the first year, but they will still need to keep digital records and submit digitally.

Customers who want to do it this way will still need to invest in a submission tool (bridging software) that will send the data, make sure they trust it is going to be compliant, then in a year, they will need to start using a solution which has digital links.

Customers will benefit from not having to switch software providers in 12 months time if they use the MTD submission module.

  1. Sage customers on 2015-17 are on supported platforms and the EOL policy states they will get legislation updates as part of their services. Why should they pay for this?

Legislatives updates started in the summer 2018 release and will continue to be provided, giving Sage customers 4 versions of Sage 200cloud that will be MTD compliant by April 2019.

Using the latest software is the best way for Sage to help customers run their business effectively, however for those customers who are unable to adopt one of these versions, the MTD submission module enables them to remain compliant.

  1. Does the module support group VAT submissions?

The MTD module offers new functionality and capabilities that are currently not available in Sage 200cloud, so yes, the module will support group VAT and/or multi-company submissions. For example, if a customer upgrades to the latest version of 200cloud, they will still require the module as the product mainly supports single company submissions. In this instance the module will be available at no extra cost.

  1. How long can customers use the submission module for?

The module will be sold to you on an annual subscription. If at the point of renewal, you haven’t upgraded to a compatible version of 200cloud, the subscription will automatically renew.

  1. What if a customer chooses not to buy the module from Sage?

There are 2 options;

  • Upgrade to the latest version,
  • Buy the submission module

Therefore, if neither option is selected, we will assume that you have chosen an alternative unsupported solution from a third party.

  1. How straightforward is a Sage 200 upgrade to the latest compliant version?

Your business partner can advise and assist with the upgrade process. The complexity of the upgrade will depend on many factors:

  • Hardware and infrastructure compatibilities (which may require new servers and/or Microsoft Software),
  • Bespoke and 3rd party add-ons upgrades,
  • PC/Workstation spec,
  • Training and data migration
  1. When is the MTD software required by?

The MTD software will be required from April 1st 2019 however this will depend on your VAT Periods. e.g. If your VAT quarters runs from 1st February to 30th April, you will need the MTD in place for 1st May, which is the start of next VAT Period following the introduction of MTD).

  1. Will there be any training on the new module?

Yes. When a customer buys the MTD submission module they will receive a free eLearning course (£200 value), delivered via Sage University. There is also a demo available on AskSage article, 41667. This can be found here.

  1. How does the customer obtain the MTD module for non-compliant versions of Sage 200

This needs to be ordered via your business partner.

For Further information, M2M Can Help…

So, what happens next? For customers looking to buy the latest module, our friendly team at M2M can help by processing your order with Sage. We can also advise and assist with your Sage 200 upgrade, and for those with non-compliant versions of Sage 200, we can order the MTD module on your behalf.

For further information on MTD, why not take a look at VAT Notice 700/22, which explains the rules for Making Tax Digital for VAT in more detail, or please feel free to contact us.