What are the requirements of Making Tax Digital?

Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT Returns using the software.

Can Spreadsheets be used at all?

Only API enabled spreadsheets could be used to make VAT filing.

What software could be used?

Software compliant with HMRC API could be used to keep digital records.

Are there any exemptions?

You will not have to follow the Making Tax Digital rules where HMRC is satisfied that:

  • your business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers)
  • it is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reasons of age, disability, remoteness of location or for any other reason
  • you are subject to an insolvency procedure

These may apply even if you are not currently exempt from online filing for VAT.

If you think any of these apply to you then contact the VAT Helpline to discuss alternative arrangements. If HMRC considers that an exemption is not appropriate, digital assistance may be available to help you get online support.

What are the timelines for Making Tax Digital rules?

The Making Tax Digital rules apply from your first VAT period starting on or after 1 April 2019. A ‘VAT period’ is the inclusive dates covered by your VAT Return.

Example 1 – Existing business with taxable turnover above the VAT registration threshold on 1 April 2019

A business submits a quarterly return covering the period 1 March to 31 May 2019. The business taxable turnover exceeds the VAT registration threshold and therefore the business will need to comply with Making Tax Digital rules for the period starting 1 June 2019.

Example 2 – Business with a taxable turnover above the Making Tax Digital threshold at the point they need to register for VAT

A business that is not registered for VAT is required to register from September 2019 because the taxable turnover over the previous 12 months has exceeded the VAT registration threshold. The business must follow the rules in this notice for all VAT Returns they are subsequently required to make as their taxable turnover was above the VAT threshold when they were required to register.

Example 3 – VAT registered business with taxable turnover below Making Tax Digital threshold until November 2019

A business is registered for VAT but its taxable turnover is below the VAT registration threshold until November 2019. The business must follow the rules in this notice for any VAT period that starts on or after 1 December 2019 as its taxable turnover now exceeds the VAT registration threshold.

Is there a list of approved software providers?

HMRC has recently published following list of software suppliers but they are still updating the list. Please see the following link for the updated list.

  1. aaaDataX
  2. Abratax
  3. Absolute Accounting Software Ltd
  4. Accentra Primo Umbrella
  5. Access Group
  6. Accounting Office Software Ltd
  7. AccountsPortal
  8. Acorah Software Products Ltd (TaxCalc)
  9. Accu-Man
  10. Advanced Computer Software Group Limited
  11. Ajaccts
  12. Anagram Systems
  13. Arkk Solutions
  14. Avalara
  15. Bridge Squared
  16. BTCSoftware
  17. Bx
  18. Capium Limited
  19. Cirrostratus – Exedra
  20. Clear Books plc
  21. COINS
  22. Croft Computer Systems
  23. DC Software
  24. Deloitte LLP
  25. DTracks Limited
  26. Easy Books
  27. eFileReady
  28. Essentia Global Services
  29. Exel Computer Systems plc
  30. EY
  31. Farmplan
  32. FinanSys Solutions Ltd
  33. Forbes Computer Systems
  34. FreeAgent
  35. GoSimple Software
  36. Grant Thornton UK LLP
  37. Hartigan Software
  38. Ibcos Computers Limited
  39. Integrity Software
  40. Intuit – QuickBooks
  41. IRIS
  42. KAI Consulting
  43. KashFlow
  44. KPMG
  45. Landmark Systems Ltd
  46. Liquid Accounts
  47. MAM Software Limited
  48. Motor Trade Technologies Limited
  49. My Digital Accounts
  50. Neilson James Technology
  51. Omni
  52. PwC
  53. Quickfile Accounting Software
  54. Rialtas Business Solutions
  55. Road Tech Computer Systems Ltd
  56. Ryan Tax Services UK Limited
  57. Sage (UK) Limited
  58. SAP
  59. SDA Logic Limited
  60. Simplifi-HQ Limited
  61. Tax Automation Limited
  62. Tax Optimiser
  63. Tax Systems plc – AlphaVAT
  64. Thomson Reuters – ONESOURCE
  65. Thomson Reuters – Onvio
  66. Tyresoft Ltd
  67. Vertex Global Tax Solutions
  68. Vital Code Ltd
  69. Wolters Kluwer
  70. Xero
  71. Zoho Books