Secondary Legislation by HMRC Regulations
Last week the government published the secondary legislation for MTD. These set out the requirements for MTD VAT which is due to take effect from April 2019. However, treat this with caution as it has been published in draft for consultation and the deadline for comments has been set for 10 November 2017.
Judging by reactions from some larger businesses two weeks ago during informal meetings with HMRC and the apparent lack of political support it will be no great surprise if further changes are announced. The final version of the secondary legislation for MTD VAT is expected no later than April 2018, thus giving at least twelve months’ notice prior to first staging date in April 2019.
The regulations provide that a business in scope for MTD must use functional compatible software to meet the new requirements. What does this mean? The software must carry programs that can connect to HMRC using Application Programming Interface (API) including functions to:-
• Keep records in an approved digital format.
• Preserve Digital records in an approved format.
• Create a VAT return from the digital records and provide HMRC with this information digitally
• Provide HMRC with non VAT data on a voluntary basis.
• Receive information from HMRC via the API platform.
Businesses will need to preserve digital records in compatible software for up to six years.
Bearing in mind the nuances of VAT schemes such as the flat rate scheme; partial exemption; second hand goods scheme; capital goods scheme the software producers are going to have busy diaries over the next eighteen months or so. Up until now they have been concentrating on getting ready for the income tax requirements of MTD for businesses and landlords which has now been shelved until 2020 or later.
The consultation period is going to be an interesting one and I will report on the impact of comments and concerns from businesses and professionals on the secondary legislation as soon as this is known.
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