VAT RETURNS - 23.03.2017

End of the VAT return

Overhaul. HMRC is set to overhaul how business taxes are reported with the introduction of a new reporting system called Making Tax Digital (MTD). This will see the abolition of the VAT return for certain businesses from 2019, including VAT-registered self-employed businesses, landlords and large partnerships.

Effect. Those affected will have to provide summary tax data to HMRC quarterly using digital tools - the data will be automatically generated for the business from its electronic records. For VAT-registered businesses, these quarterly updates will replace the VAT return. HMRC has agreed that it will accept submission using spreadsheets, but they will have to meet certain criteria to be accepted.

Who? Currently, all businesses with a turnover exceeding £10,000 will be required to submit data via MTD, although HMRC is reviewing this with the possibility that the smallest businesses will not be affected. This will not impact on the VAT registration threshold so if you are not VAT registered you won’t be required to submit VAT returns.

When? The timetable for the introduction of MTD is as follows:

• April 2018 - quarterly reporting for income tax purposes (that is all unincorporated businesses, including partnerships, whether VAT registered or not) with turnover in excess of £85,000.
• April 2019 - quarterly reporting for VAT purposes (that is all VAT-registered businesses whether unincorporated or not) and for income tax purposes for any unincorporated businesses not included above.
• April 2020 - quarterly reporting for corporation tax purposes (that is all companies, both those who are already quarterly reporting for VAT purposes, and those who are not VAT-registered).

The intention is that VAT reporting will synchronise with the new quarterly reporting requirements for income tax and corporation tax if the business is VAT registered.