Making Tax Digital for VAT teams: Submissions and deadlines – Sage Recommendation United Kingdom

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Making Tax Digital for VAT teams: Submissions and deadlines – Sage Recommendation United Kingdom

Making Tax Digital for VAT has been round since April 2019.

Any particular person or enterprise registered for VAT should hold key VAT accounting information digitally and use software program to submit their VAT Returns.

Successfully, this has meant most companies use software program for his or her accounting.

This brings big advantages inside itself, resembling much better insights into enterprise funds in comparison with trying to maintain accounting information manually.

MTD for VAT applies to VAT teams too, and brings the identical guidelines and necessities.

On this article we check out this, plus a number of deadlines which have come and handed referring to VAT teams and MTD.

For extra details about all points of Making Tax Digital, please go to Sage’s MTD Hub.

Right here’s what we cowl:

Group VAT MTD registration

So, what’s a VAT group?

Typically it’s financially smart for 2 or extra firms (referred to as ‘our bodies company’), or two or extra partnerships, companies or people, to make use of only one VAT registration.

This is called a VAT group registration.

In sensible phrases, it means one member of the group acts because the consultant member for VAT functions. This member is answerable for VAT Returns, plus paying and reclaiming VAT, for all of the members of the group.

The second key profit is that members of the VAT group needn’t account for VAT when making provides to one another.

Making Tax Digital for VAT applies to group VAT registrations, identical to it applies to any particular person VAT-registered enterprise.

However issues are way more complicated with VAT teams in comparison with a standalone VAT enterprise, as a result of there’s sometimes much more information to be gathered for every return.

This may exist in a number of areas.

In keeping with the foundations of MTD for VAT, the assorted accounting methods throughout the group must be digitally linked.

It needs to be potential for all of the accounting methods or different software program (resembling point-of-sale methods) utilized by every enterprise to ship or in any other case make out there their information in a single digital location.

That information is then used to organize the VAT Return.

It’s due to points resembling this that HMRC allowed a number of delays for bigger organisations resembling VAT teams following the beginning of Making Tax Digital for VAT in April 2019.

Making Tax Digital for VAT software program

Uncover how Sage Accounting may also help you get your MTD for VAT submission proper, calculate your invoice and submit your VAT Return with ease.

Find out more

Deadlines for MTD for VAT teams

Though now handed, there have been two key deadlines for Making Tax Digital for VAT relating to VAT teams.

October 2019

This was the deadline by which VAT teams wanted to begin observing the foundations of MTD for VAT.

In different phrases, it utilized for the primary full VAT accounting interval after October 2019.

This meant that, if the VAT group filed quarterly VAT Returns, and their first MTD for VAT interval began in October 2019, the primary MTD for VAT Return would have wanted to have been submitted in early February 2020.

Bigger organisations resembling VAT teams obtained this extension following the April 2019 introduction date due to the standard complexity of their methods, and sure points arising in getting every part prepared in time.

October 2020

When Making Tax Digital for VAT began, HMRC allowed what was referred to as the smooth touchdown interval.

Companies might ignore a key a part of the digital linking requirement—particularly, that manually copying or chopping and pasting information between two areas was prohibited.

As talked about, relating to VAT group registrations, making a VAT Return can contain collating info from varied sources. Due to this fact, having the ability to lower/copy and paste may be very helpful.

Nonetheless, as of October 2020, the total digital linking guidelines got here into power.

This meant lower/copy and paste was in opposition to the legislation when it got here to key VAT accounting information and getting ready the VAT Return. Any companies caught doing so might be penalised by HMRC.

For these submitting group VAT returns, this got here as one thing of a blow—however HMRC had allowed a full 12 months following the introduction of MTD for VAT for the group VAT member to organize.

What are digital hyperlinks?

The principles of Making Tax Digital say the related accounting information should be saved digitally.

Moreover, software program should be used to ship returns or different kinds of updates to HMRC, as required throughout the MTD guidelines.

Due to this fact, when you use a couple of piece of software program or a couple of system, they should be all be digitally linked.

It should be potential to robotically switch the info from one digital location to a different.

You might need to click on a button to begin off this automated switch, however the important thing factor is that you just’re not doing it manually—maybe by copying and pasting the info, and even scribbling it right into a pocket book after which rekeying it into one other system.

That mentioned, what’s thought-about digital linking can generally be shocking and just a little counterintuitive. Emailing a spreadsheet is okay, for instance. You may even cross information to someone by way of USB reminiscence stick.

The principles for digital linking for Making Tax Digital for VAT will be discovered within the VAT Notice 700/22.

It’s not but clear if Making Tax Digital for Revenue Tax (also referred to as Making Tax Digital for Revenue Tax Self Evaluation) or Making Tax Digital for Company Tax will use the identical digital linking guidelines.

FAQs on MTD for VAT teams

Right here’s the reply to some often requested questions round Making Tax Digital for VAT, in addition to VAT teams.

What’s a VAT group?

Reasonably than create particular person VAT Returns throughout a number of firms or organisations you may management, you’ll be able to mix them right into a single digital entity known as a VAT group.

This implies you solely have to submit one VAT Return, which can report all of the group member’s VAT provides and acquisitions.

VAT teams get rid of the necessity for VAT accounting between firms within the group.

In different phrases, if Firm A makes a provide to Firm B, then there will probably be no have to account for this as a VAT provide.

Nonetheless, there are some exceptions to this, together with some bought-in providers, and the price element for some provides. That is detailed in Part 7 of VAT Discover 700/2.

There are additionally sure limitations on what entities can kind VAT teams. These are listed in Part 2.2 of the above VAT Discover.

Who can kind a VAT group?

A VAT group can comprise varied components:

  • Our bodies company, which is to say, integrated companies (restricted firms, public restricted firms, and so forth).
  • Eligible non-corporate our bodies, which is to say, people, partnerships and Scottish partnerships. The inclusion of non-corporate our bodies has solely been potential following a change of the legislation in 2018.

There are different guidelines, resembling the very fact the our bodies company or non-corporate should have a hard and fast institution within the UK, and be below frequent management.  

What’s a VAT group registration?

A VAT group registration is the place one individual or enterprise registers for VAT on behalf or two or extra our bodies company, or two or extra people, partnerships or Scottish partnerships.

This implies the individual or enterprise is handled as a single taxable individual or enterprise, but they’re answerable for submitting a single VAT Return on behalf of all members of the group.

To create a VAT group registration, you need to full the shape VAT 50/51 with particulars of the VAT group, after which register for VAT within the standard manner (identical to any particular person or enterprise), offering VAT 50/51 as an attachment.

How do I submit a bunch VAT Return?

Submitting a bunch VAT Return is completed identical to it’s for a person or enterprise. It’s essential to use software program to submit the VAT Return, as per the foundations of MTD for VAT.

The software program connects to HMRC’s computer systems throughout the web so you’ll be able to file the VAT Return.

A spreadsheet can be utilized to compile VAT accounting information for a bunch VAT return, offered the digital linking guidelines above will not be damaged.

Bridging software can then be used with the spreadsheet to make a VAT Return submission to HMRC.

Nonetheless, most VAT teams use MTD-ready software for his or her VAT accounting, and so are simply capable of create the VAT Return based mostly on information already throughout the system(s).

Ultimate ideas on MTD for VAT teams

VAT teams provide a helpful strategy to account for VAT throughout a number of companies.

It could actually scale back complexity and prices.

Nevertheless it additionally brings its personal necessities relating to legally complying with MTD for VAT’s necessities, and significantly the prohibition on copying/chopping and pasting information from one place to a different.

Nonetheless, the advantages of utilizing Making Tax Digital for VAT—and due to this fact utilizing software program for VAT Return submissions—deliver such highly effective advantages that it is a small sacrifice.

Editor’s word: This text was first printed in February 2022 and has been up to date for relevance.

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