We have slipped into the second phase of MTD for VAT, as those businesses who had a deferred start date are now starting to keep digital VAT records and to prepare to file their VAT returns using MTD compatible software. Their VAT returns for the periods starting on or after 1 October 2019 must be submitted under MTD.
Deferred businesses include those based overseas but registered for VAT in the UK. When some of those businesses have tried to sign up for MTD, (or their tax agent has attempted to do so), they have found the business is treated as a UK based businesses, and it is unable to complete the process. This is an ongoing issue which HMRC is trying to resolve.
Another problem has been random incorrect “VAT notices of assessments” for businesses which have filed their VAT return under MTD and paid on time. HMRC’s advice is to double check that the business has submitted the VAT return and paid the tax, and if it has, ignore the HMRC letter.
We recommend you keep the HMRC letter and take screen shots of the information which proves the relevant VAT return has been received, and the VAT has been paid. You can’t be too careful with electronically presented information held on HMRC’s computer.
To check whether our client’s VAT return has arrived with HMRC we use the “Manage your client’s details” service. Our MTD software may also provide us with more information about our client’s VAT payments, such as the instalments paid and any outstanding liabilities.