Making VAT Digital – Where are we now? 9 July 2019

As with anything new in VAT, it’s not until you have to wrestle with the implementation that the reality of the task sinks in – and that’s where I think HMRC are with this, as much as taxpayers. MVD is actually quite a cathartic process, we find, when working with clients. Mapping digital weak spots is flushing out core areas where management time can actually be saved through digital fixes.

Actions that were thought to be essential but are not – such as time spent on coding purchases that bore no VAT yet were mulled over as to whether they were Zero/Exempt/Non-Business can be stopped. The other cathartic aspect is that the walkthrough of data picks up and challenges longstanding assumptions of VAT treatments of income or VAT cost allocation and finds simple compliance disconnects such as Taxable income through Payroll deductions that are missed.

The sense from our clients is that – as suspected – support from software providers has been mixed and, in some instances, disappointing. We do need to get all parties - the IT and the VAT tech side - round the table to maximize the benefits of implementation and to ensure that our accounting needs don’t get lost in translation - that IT teams appreciate there is a time scale to adhere to.

Clearly as implementation rolls forward HMRC are starting to recognise the practical barriers that taxpayers are facing on this. We understand from meetings with HMRC that there is an expected letter from HMRC due late summer/autumn on MVD but its actual detailed content is currently unknown.

The MVD update in May of the Guidance Notice 700/22 highlighted some relaxations and there is the announcement of an, as yet unknown, Deferral date for the NHS and Government Departments using the “GIANT” (Government Information and National Health Trusts) online reporting systems.

Locally we’ve been able to clarify the agent position for a particular client who is undertaking the VAT reporting for separately VAT registered entities in their structure – which has removed their concern on the inability to register through HMRC as an agent for MVD but there is by no means general guidance for all affected organisations of a relaxation in this agent registration requirement.

Dealing with MVD reminds us of the importance of shared communication on any VAT issues but particularly on this one – the UK’s step into Digital Reporting lags behind other tax systems across the globe – many systems have real time reporting aspects – this for us is a first step into that Digital space but more will follow we're sure.

The value of good communication and proactive action is key for a successful implementation of MVD. If your organisation would like to access our MVD implementation offering then do make contact – emailus@centurionvat.com

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