What To Do For Making Tax Digital?

[Katie_B]

Hi,

I’ve done numerous searches on the forum and wish to clarify what I need to do to be ready for Making Tax Digital as I’ve now entered the first time period that will be included in a VAT return (Feb-Apr) requiring to be filed MTD. Could someone please confirm whether the below steps are all I need to take:

1. Register for online filing with HMRC
2. Fill in credentials on Quickfile VAT settings (click enable online filiing)
3. Submit VAT Calculations in Quickfile for the period Feb-Apr 19 and save it, it will go through to HMRC automatically satisfying MTD?

Final other question, I’m on standard rate VAT from 1st Feb - I’ve seen various posts about how to account for reverse charge VAT for EU services purchased and the need to make adjustments on the VAT return before submitting as below which is copied from another post:

@ian_roberts

The “apply reverse charge” box is what you want. Enter the £150 the supplier charged you as the net amount on the QuickFile purchase, set the VAT rate to 20% and tick the reverse charge box. This will show £30 VAT as added on at the line level (making the line total £180) and then deducted again in the footer as “EC VAT exemption”, and the final invoice total will still be £150.

However, when it comes to the VAT return this will be treated as an acquisition of goods rather than a reverse charge transaction for services, so you need to make a couple of adjustments to your return using the drop down arrows. EC acquisitions put the VAT in box 2 and the net in box 9, whereas reverse charge transactions need the VAT in box 1 and the net in box 6, so you need to adjust:

• +30 to box 1
• -30 from box 2
• +150 to box 6
• -150 from box 9

This doesn’t affect the total amount of VAT so there’s no further adjustment required.

If I do this and make the adjustments before submitting will this go through fine to HMRC for MTD and be correct?

[QFMathew]

Hi @Katie_B

@Katie_B

• Register for online filing with HMRC
• Fill in credentials on Quickfile VAT settings (click enable online filiing)
• Submit VAT Calculations in Quickfile for the period Feb-Apr 19 and save it, it will go through to HMRC automatically satisfying MTD?

That sounds correct, however, ensure your VAT return has a “MTD” label on it, otherwise HMRC may reject it.

Regarding the adjustments - I think this is probably best answered by your accountant to ensure it’s correct.

[cbmoran64]

Please note that MTD for VAT applies to VAT periods starting on or after 1st April 2019, therefore it will not be this period you need to worry about, but your next quarter from 1st May to 31st July.

[QFMathew]

Worth noting - If you have signed up to the MTD VAT pilot before 1st April, you need to submit your returns using MTD VAT. Otherwise, HMRC may reject it. This is what we’ve seen with other users.

[tim_w]

Hi, I’m a new QuickFile user, very impressed so far.

I’ve been through most of the ‘reverse charge’ related posts and given that this is the most recent I just wanted to add my voice to the consensus that: services from EC companies that are reverse charged should go in box 1,4, 6 and 7 rather than 2, 4, 7 and 9 (which is the default set up on QuickFile).

Here’s a good reference: https://www.greenaccountancy.com/vat-on-international-transactions/ (I assume it can be trusted! It’s much easier to understand than the official guidance on HMRC’s website)

Aside: According to this website VAT for goods should go in boxes 2, 4, 6, 7 and 9.

Anyway, it would be really great if there was an extra reverse charge setting on the invoice that supported putting the numbers in these boxes instead (1,4 ,6 and 7). Even if it was hidden behind some sort of advanced setting that wasn’t the default e.g. “Enable custom/services reverse charge settings” .

I understand that as a accountancy/reporting software you are trying not to replace the role of the accountant for advice, which puts you in a difficult position. Therefore some sort of annotation on any such setting could be along the lines of get professional advice from an accountant before using this setting warning etc.

Right now I get the feeling a lot of us are in the same boat: either making manual adjustments or (more likely!) just sending incorrect VAT returns. I must admit that until last year I was putting the numbers in the wrong boxes myself!

I hope you’ll consider my request, thank you very much!

[QFMathew]

Hi @tim_w

Thanks for your post. VAT is likely to be an area we review after March given the uncertainty with Brexit. It may be the case that this whole area is revised by HMRC.