Published on 5.4.19

VAT Update No.48 - April 2019

Making Tax Digital

The day before Brexit should have happened, HMRC published its guidance on the new law related to keeping digital VAT records.  This affects VAT registered entities in the education sector.

Since our last Education Sector VAT update was released, HMRC decided to “defer” MTD for six months for more complex entities.  For public corporations like FE Colleges, Trusts and VAT group registrations, the registration for the digital returns is delayed until the first VAT period starting on or after 1 October 2019.  For most this means the VAT quarter ending 31 January 2020 will be the first to be digitally uploaded.  However, if you have a separately VAT registered subsidiary company it will need to have its own digital account with HMRC which will need setting up for the first return commencing on or after 1 April 2019.


Digital Portal Set-up

You will need to arrange to set up a digital portal with HMRC roughly the month before you submit the first digital return.  However, do not register before you have submitted the final VAT return under the “old” system.  For those with quarterly VAT returns ending 31 October 2019 for example, you need to first submit and settle payment of the October return; then register for digital returns during the time slot up to 31 January 2020.

In addition, unless you are submitting figures directly from your main accounts package (e.g. from an excel spreadsheet), you will need to procure approved bridging software.  The software must be procured before you set up your digital account as you will have to link it in.

For VAT group entities, consolidation of VAT data reporting will also need to be digitally linked together.


HMRC Guidance

Accompanying this update is a copy of HMRC’s new guidance on digital record keeping.  This also provides useful links to further HMRC guidance.

It is worth noting your accounts system must have the ability to provide an audit trail to value of input VAT on expenditure even if you are not reclaiming it.  Of course, due to partial exemption issues, most charity education providers cannot reclaim VAT at all or only partially.  However, you are to be required to provide this information and therefore you need to review if changes to your accounts package and processes are required.  The ability to pull input VAT data into excel and filter and pivot as required is recommended.

For income too, such as with retail sales from catering you need to provide a digital record of daily gross takings figures.  Where catering is managed by an external agent, they will need to provide a monthly summary of gross takings data.

Where purchases are made from outside the UK, a digital record of VAT to be reversed charged (also known as self-accounting) and acquisition VAT for EU purchases, will also need to be maintained.


Annual VAT Seminar and MTD Workshops

We intend running our annual VAT update for education clients in Oxford.  This will cover MTD and other VAT topics.  We will also be running a couple of workshops specifically on MTD record keeping as follows:-

5 July 2019           Oxford Education VAT Update Seminar including MTDW/C

8 July            MTD workshops at Exeter and Solihull FE Colleges.

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VAT Update No.48 – April 2019

Making Tax Digital The day before Brexit should have happened, HMRC published its guidance on the new law…

Read more