Many businesses have filed their last VAT return under the old regime, and we are registering them for Making Tax Digital ...
Such registration couldn't be done until we were past the VAT payment dates, specifically the direct debit collection date. As part of the Making Tax Digital (MTD) signing up process, all direct debit mandates are being automatically transferred, but there has been a subtle and very important change.
From now on, HM Revenue & Customs (HMRC) will be collecting the balance on the VAT account rather than the return amount. So, if you have underpaid in the past, HMRC will be bringing matters up-to-date.
There is a positive to be had for businesses who, for some remote reason, are unable to file a VAT return, they can make interim payments to mitigate surcharges which will be held in their VAT account. When the Return is finally submitted, HMRC won't collect the payment again.
Many of my regular readers may have read that HMRC will only permit the use of spreadsheets and bridging software for filing VAT returns in the first year. This is not the case now as HMRC have confirmed that spreadsheets and bridging software will be allowed for the foreseeable future.
This is good news for some very small businesses as spreadsheets with limited transactions are still the best option. For businesses who have to operate a partial exemption or margin schemes, spreadsheets are still the best solution owing to the complex calculations that some software can't cope with.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.