The new VAT reporting rules being introduced in April 2019 may sound scary and you might be told that you have to go onto a new accounting system to be able comply. This is not necessarily the case.
A simple software bridge may be all your business needs to be ready for HMRC’s new VAT rules.
What is Bridging Software?
Bridging software is a piece of software that links your system or spreadsheet to the new HMRC VAT system (Gateway). It merely bridges the gap between you and HMRC and makes you Making Tax Digital ready.
From April 2019, all VAT reporting for businesses with a turnover above £85,000 (the current VAT threshold) will have to report their VAT return information into the HMRC’s new online system. The widely used method of going to the HMRC website and filling in the figures on their screen will no longer be available.
In reality that means the following timetable:
- By 7th June 2019 for VAT monthly.
- By 7th August 2019 for VAT quarter to 30th June 2019
- By 7th September 2019 for VAT quarter to 31st July 2019
- By 7th October 2019 for VAT quarter to 31st August 2019
The rules for complying with the new VAT reporting regulations apply simple quite generalised compliance criteria. The legislation retains what is currently in place with regards to keeping and preserving records. The legislation additionally provides for keeping and preserving digitally some designatory data (business name, VAT registration number etc.) and totals for information relating to each VAT account.
So existing systems that are currently compliant with the regulations regarding keeping and preserving of records should still be compliant. All that needs to be added is a solution for keeping and preserving totals relating to each VAT account and using those totals to electronically send the values for the existing 9 boxes directly to the VAT Gateway.
Springboard IT (UK) Ltd are recognised by the HMRC to build links to the Governement Automated Gateways including the VAT reporting gateway.
This allows them to work with businesses to build simple MTD compliant solutions where the existing system already complies with the current record keeping and preservation regulations. They can collect the totals from those systems electronically (possibly using existing reports), store and preserve the VAT account information and transfer it electronically (without amendment) to the VAT Gateway.
At one end of the scale this might be a less risky approach for businesses facing significant projects to update and change current systems to comply, or at the other end of the scale it may allow businesses that have simple solutions (Spreadsheets for instance) that work perfectly well and already keep and preserve VAT information as required by current legislation to continue using them with a simple bolt on.
Springboard IT (UK) Ltd firmly believes a similar approach will be taken for the next step which comes into force in 2020 although those regulations and systems are not yet fully defined. The next step covers the collection and transmission of accounting information quarterly. They expect to extend their VAT solutions to comply with those regulations.