TaxSource Total

Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

Happy new tax year

The new tax year 2019/20 commenced last month on 6 April 2019 bringing into effect a plethora of changes to the UK tax system.

Making Tax Digital (“MTD”) began on 1 April 2019, and applies to any VAT-registered business with a turnover exceeding the current VAT registration threshold of £85,000 and which has not received confirmation from HMRC that MTD for VAT is deferred to 1 October 2019. Take a look at our MTD hub on charteredaccountants.ie for more on this important change. In a Press Release issued last month, the Institute is warning that MTD will add to the burden of business.

At the heart of the MTD regulations are two core requirements:-

  • Digital record keeping – for the first time businesses will be required to keep and preserve digital records; and
  • Electronic filing of VAT returns – to submit a VAT return, for the first time businesses must use information stored in their digital records combined with “functional compatible software” to submit VAT returns directly to (and receive responses from) HMRC.

HMRC have recently announced more details of the soft landing for MTD for VAT. During the “soft landing” period only (i.e. the first year from either 1 April 2019 or 1 October 2019), where a digital link has not been established between software programs, HMRC will accept the use of cut and paste as being a digital link for these VAT periods. Cut and paste will not be acceptable after this period has elapsed. VAT Notice 700/22: Making Tax Digital for VAT sets out this and the “soft landing” in more detail.

At the Spring Statement it was also confirmed that MTD will not be made mandatory for any other taxes or businesses in 2020. The government also confirmed that there will be a “light touch” approach to penalties in the first year of implementation of MTD. Where businesses are “doing their best to comply, no filing or record keeping penalties will be issued”. This soft landing does not apply to late payment penalties (default surcharges) which are unchanged.

The restriction which prevented overseas businesses from joining the MTD for VAT pilot has now been removed. All businesses except those that use the VAT GIANT system can now join the MTD for VAT pilot.

Guidance has also been issued confirming that firms will need to create a single agent services account for the whole practice to sign up clients to MTD for VAT.

Once a business has been signed up to MTD for VAT it is no longer possible to file returns through the government gateway VAT return or using XML VAT filing software.

HMRC have also published sign up timelines guidance for MTD for VAT. Agents and businesses are reminded that a business must be signed up for MTD for VAT at least seven working days in advance; HMRC will not do this automatically. If a business must meet the requirements of MTD for VAT for its first VAT period beginning on or after 1 April 2019, the sign up timelines sets out the first VAT return period affected for both monthly and quarterly filers.

The following documents relevant to MTD have recently been updated:-

The fifth MTD update for agents is also available (readers should note that this was published before mandation began in April 2019).

Whilst the first returns for VAT return periods commencing on or after 1 April 2019 are not due for several weeks we’d like to hear about your experience with MTD for VAT so far.

We’re interested to know if you’ve signed up your business or clients for MTD and if you took part in the trial before the system went live on 1 April. Let us know your experiences to date so that we’re equipped with the right information to discuss progress to date and any issues/problems with HMRC. Contact leontia.doran@charteredaccountants.ie.