Latest regulatory updates

Last updated 7th February 2019Kurt Janson

Kurt Janson, Director of the Tourism Alliance, gives a monthly update on the latest regulatory changes affecting the hospitality industry. 

Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in the Pink Book of Legislation, we regret that we cannot be responsible for any errors. Read our full disclaimer

Making Tax Digital

The days of taking a shoebox full of receipts to your accountant so that they can sift through them and calculate your VAT returns and the amount of corporation tax you owe are about to end.

From 1 April 2019, the Government is launching a major new initiative aimed at getting small businesses to do their accounts online in ‘real time’. Known as Making Tax Digital (MTD), this initiative will be a significant change on how many small businesses undertake their tax assessment and reporting to HMRC.

MTD is being introduced as a two-stage process.

  1. On the 1st April 2019 you will be required to record and submit your VAT returns digitally.
  2. In 2020, HMRC is planning to expand the MTD initiative to include corporation tax.

Does MTD apply to me?

If you are a VAT registered business

From 1 April MTD will apply to VAT registered business with a taxable turnover above £85,000. From that date, you will be required to keep all your VAT records digitally and use MTD compatible software to submit your VAT returns.

If you are not a VAT registered business

From 2020 all businesses, regardless of their size, will be required to keep their income and expenditure data digitally and use MTD compatible software to submit returns to HMRC.

There is, however, an exemption if you are unable to submit returns electronically because of disability, age or remoteness of location. So if your business is in a location that has a very poor online service you can still file VAT returns the normal way.

I’m a VAT registered business. What do I need to do to comply?

You will need to keep the following information as digital records:

  • Business name, principle place of business and VAT registration number (to also include the VAT accounting scheme used by the business)
  • The VAT account showing the audit trail between primary records and the VAT return
  • Details about supplies made and received

To do this you will need to use MTD compatible software which will generate these digital records and use them to transmit your VAT returns to HMRC.

It is important to note that the digital records generated for your VAT returns will need to be kept for six years.

How do I do this?

The first thing you need to do is to sign up your business to Making Tax Digital for VAT. HMRC estimates that over 1 million VAT registered businesses will need to sign up for MTD before the end of March 2019.

This can be done through the Government Gateway website.

If you’re already using software to keep your VAT records, you will need to check that this software is compatible with MTD. This can be done by either contacting your supplier or checking with the list of compatible software on the website.

If you do not already use software to keep VAT records, you will need to download MTD compatible software to use for this purpose. HMRC has been working with a number of companies to produce the software for you and a list of approved software providers is available on the website.

Further Guidance

HMRC has produce a range of videos and webinars to help explain the MTD initiative and what you need to comply on a dedicated help and support page.