1. Making Tax Digital for Business
Presentation to the
CIPFA VAT Committee
1 March 2018

2. What is Making Tax Digital?
Capturing all transactions in
record-keeping software:
as near to real time as possible
on any device (pc, smartphone, tablet etc.)
Summary updates via API* enabled software
Application Programming Interface

3. How is MTD VAT different
What will be different:
VAT returns compiled by pulling data from digital records
VAT returns sent to HMRC via API-enabled products and not through VAT portal
What remains the same:
9 Box VAT return
VAT return frequency and payment deadlines
Eligibility for VAT Special Schemes
Public bodies submitting additional information required by HM Treasury for reclaiming VAT.

4. Timeline for VAT February 2018 April 2018 From April 2019
Technical consultation closed – 9 February 2108 Regulations made – 28 February 2018
April 2018
VAT pilot – Live testing of MTD begins
From April 2019
Businesses trading above the VAT threshold are mandated to use MTD

5. MTD VAT Secondary Legislation Consultation
The VAT Secondary Consultation closed on 9 February 2018 and the government received 60 responses
Businesses leaving MTD can consider alternative methods of preserving their records rather than having to keep them in a specified MTD format.
We have also relaxed requirements for digitally recording information for supplies made or received where:
property owners receive data from letting agents;
there is difficulty in identifying and splitting the tax value on each supply, for example multiple supplies within a single retail offer; and,
the amount of partial input tax claimable on each partial exemption is not known at the time of purchase.

6. VAT Pilot Starts in April 2018 Agent can act on behalf of their client
Simplest businesses first
More complex businesses join as pilot grows
Must have compatible software to take part
Software development and testing
Publish more information

7. Digital record keeping
Using MTD compatible software to:
Keep digital records
spreadsheets
calculate the return
submit it to HMRC via an API

8. ‘Functional Compatible Software’
Program, or set of compatible programs, that must:
Keep digital records
Provide HMRC information and returns using the APIs
Receive information from HMRC
If a set of programs are used, there must
be a digital link between the
pieces of software

9. Data transfers and adjustments
HMRC anticipates that there will be a soft landing period (April 2019 – April 2020) without application of record-keeping penalties, during which this digital link is not mandatory. This will allow businesses extra time to update their systems to be fully compliant.
VAT Group member 1 (XML)
VAT Group member 2 (Spreadsheet)
VAT Group member 3 (XML)
Digital link
Spreadsheets
Mandatory digital link
Bridging/
Linking software
API
VAT return submitted to HMRC
The mandatory digital record keeping requirements will be maintained by each member of the VAT Group.
A spreadsheet (or a series of spreadsheets) will be used to collate figures of all members of the group.
This does not always have to be a VAT group, this may also apply to large organisation operating multiple systems e.g. Local authorities

10. Data transfers and adjustments
Digital records maintained in non API enabled software
Mandatory Digital Link
Agent/Auditor’s API enabled software
API
VAT return submitted to HMRC
NB. Agents/Internal Control may have access to their client’s software.
Adjustment by manual intervention
This could range from correcting mistakes to adjustments required by VAT law. These interventions could also take place within the confines of a single software product.
Any correction of mistakes must be made by the agent back into the client’s digital records.
Adjustments

11. What we mean by ‘Soft landing’
Links between packages/interfaces must be digital.
But…
For a short period (HMRC has proposed one year)
more time to update legacy systems
won’t apply record-keeping penalties in certain circumstances