March 25th, 2019

MTD for VAT- voluntarily VAT registered or near the limit? what do you need to do?

This is posing many questions for businesses.

When do you need to register for VAT  and MTD.

If you have taxable turnover above the VAT registration threshold (currently 85,000) you must register for VAT.  However there are instances when businesses that are under this amount will register for VAT as it commercially advantageous for them to do so.

Compulsory registration for VAT only applies when taxable supplies made in the UK exceed £85,000 on a rolling 12 month basis, not a financial year.  You should only include those supplies of goods and services that would attract VAT at the standard, reduced, or Zero rate once registered, together with the value of imported services to which the reverse charge would apply.

Supplies that are exempt from VAT or outside the scope of VAT are ignored as far as the threshold is concerned.

Under MTD for VAT it’s only compulsory from 1st April 2019 for businesses above the threshold.  If you had voluntarily registered you will not be required to comply with the MTD obligations.  The existing method of online filing using the HMRC VAT form will remain.

However, you can chose to enter MTD for VAT on a voluntarily basis.  This will be available on your government gateway login as an option to sign up.  You can actually do this now before the compulsory date of 1st April 2019 if you meet certain conditions.

If you don’t opt in, you will need to monitor your turnover on a rolling 12 month basis to establish when you will need to start complying.

Businesses that newly register for VAT on a compulsory basis will need to consider how they will comply with the requirements as they will have a very limited timescale in which to do so.

Once a business is required to comply, the obligations will continue even if the turnover subsequently drops below the threshold limit and they remain VAT registered.  Once you are in MTD you are in.  the only way out would be if you de-registered for VAT.

If you need help with MTD and finding compatible accounting software please get in touch and we will be happy to help.

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Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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