For charities, MTD regulation deadline is just around the corner
HMRC is expecting all charities registered for VAT in the UK to enact the new regulation by October.
Last year, charities were given an extended 6-month deadline to comply with the government’s digital tax requirements.
On October 1st, charitable trusts paying tax and VAT in the UK will need to comply with mandatory MTD. By adopting this new system, charities will be required to submit their taxes through the HMRC compliant software by keeping their records digital.
Failure to comply with MTD in time could result in charities facing issues processing tax and penalties for not respecting the system approved by HMRC.
For this reason, it is important for charities to be prepared.
The move toward digital transformation encapsulates an opportunity for organisations to revise their finance operations. MTD could also be a money-saving solution for these due to the use of more defined and efficient digital systems.
However, to embrace the digitalisation of tax charities must have the right processes put into place.
Charity Tax Group (CTG) Chairman, John Hemming commented: “We are hopeful that the move to MTD reporting, from October 2019, should be relatively straightforward for most charities as it only requires software to link their VAT return to HMRC’s systems. CTG has been encouraging charities to prepare for this changes and our website has a wide range of MTD related content, including details of cheap and free software options.”
However, we are concerned about the preparedness of charities for the digital links requirements (between records at the back end) following the end of the soft landing period in October 2020. We are working closely with HMRC to ensure that the needs of charities are considered as guidance and rules are developed and hope that practical solutions are reached.”
HMRC offers a step-by-step guide for MTD for VAT to help organisations through the transition. It suggests which software to use and shares the needed resources to manage and submit VAT returns and records. It also shares the procedure to follow if any errors on VAT returns needs correction.