Making Tax Digital for VAT

What is Making Tax Digital for VAT?

HMRC is changing the way you submit your VAT Returns. Most VAT registered businesses with an annual turnover above the VAT threshold (currently £85,000) must keep their VAT records digitally and use Making Tax Digital (“MTD”) compatible software to submit their first VAT return period starting on or after 1st April 2019.

If your business has a turnover below the VAT threshold you may still voluntarily sign up for MTD, in fact HMRC is encouraging this.

KashFlow is listed on the HMRC website as MTD for VAT compatible software which is available now.

What is the Deferral Group?

HMRC has announced a deferral date for businesses who meet certain criteria which you can check here. If you meet the criteria this will mean you must be MTD compliant from your first VAT return period starting on or after 1st October 2019.

How do I sign up and submit MTD-compliant VAT returns through KashFlow?

Please note –  once you sign up to MTD for VAT, you will no longer be able to submit your VAT returns through online filing or the HMRC portal (mark as submitted). Please ensure you are up to date with your VAT returns before signing up to MTD.

I am a KashFlow User

To sign up for MTD please follow the below steps:

On Gov.uk website:

  1. Sign up to MTD for VAT via the HMRC website by clicking here.

After you’ve signed you’ll receive a confirmation email from [email protected] within 72 hours. Don’t forget to check your spam folder.

In KashFlow:

  1. In KashFlow go to ‘Taxes’ menu and connect your KashFlow Account to the HMRC by clicking ‘Connect to HMRC’
  2. A new browser window will open to the Government Gateway login page where you will be prompted to Sign in. You’ll need to enter your User ID and Password (the same ones used in Step 1).
  3. You’ll be asked to Grant Authority for KashFlow to interact with HMRC on your behalf.
  4. You will be taken back to KashFlow where your latest VAT obligation will be automatically retrieved from HMRC and populated in the list of tax returns.

Now that you are connected to HMRC you will no longer need to manually create a VAT Return and specify the Start and End dates as KashFlow will directly retrieve from HMRC and populate it in the table automatically.

I am a KashFlow Partner

Some of the below steps can only be performed on the HMRC website so please make sure you set aside sufficient time to cater for this. To sign up for MTD please follow the below steps:

On Gov.uk website:

  1. Link your non-MTD client (s) to your Agent Services Account by clicking here
  2. Sign up each of your clients to MTD for VAT by clicking here

Note: After you’ve signed up your client (s) you’ll receive a confirmation email from [email protected] within 72 hours. Don’t forget to check your spam folder.

 

On KashFlow Connect/ KashFlow:

  1. Link your KashFlow Connect Account to HMRC by clicking the ‘Connect to MTD’ button in the VAT menu (if not connected already)
  2. A new Tab will open to the Government Gateway where you will be prompted to Sign in. You’ll need to enter your User ID and Password (the same ones used in Step 1)
  3. You’ll be asked to Grant Authority for KashFlow to interact with HMRC.
  4. You will be taken back to KashFlow Connect.
  5. You can now submit your client (s) VAT return via MTD via KashFlow Connect or KashFlow. If you have more than one client you can now make multiple VAT submissions via Bulk VAT submissions for your chosen clients saving you time.

KashFlow Connect will directly retrieve from HMRC and populate it in the table automatically.

Our MTD Setup Guide for Agents will help guide you through steps 1 to 3 which must be completed on the HMRC website. You may also wish to refer to this HMRC step by step guide.

Videos are also available on the HMRC help and support page.

See how KashFlow works with your business and your books