UPDATE: HMRC has now published detailed VAT guidance explaining how Making Tax Digital will work in practice. Contrary to earlier Government statements (see below) from 1 April 2019 all VAT registered businesses (including charities) with a taxable turnover above the VAT threshold (£85,000) are required to keep their VAT business records digitally and send their VAT returns using Making Tax Digital (MTD) compatible software.

Read more here and start your preparations today.

The Value Added Tax (Amendment) Regulations 2018 have been published, amending Part V of the  Value Added Tax Regulations 1995. The Regulations put in place the requirements of Making Tax Digital (MTD) for VAT – namely, that VAT registered businesses must keep an electronic account of specific information and use an approved form of functional compatible software to prepare and render returns.

The regulations also provide certain exemptions based on turnover, an inability to use electronic systems for religious or practical reasons and for businesses subject to insolvency. However, exempt businesses may opt for the obligations of MTD to apply to them if they wish. The amended regulations also provide rules for how business records should be preserved.

An explanatory memorandum to the regulations provides further background information and detail regarding the new requirements. HMRC is continuing to work on a VAT Notice and other guidance, which will be published in due course to support these regulations.