Charities urged to prepare for Making Tax Digital VAT

The Charity Commission is urging trustees to ensure charities are getting ready for the implementation of Making Tax Digital for VAT, which starts on 1 April

In its regular newsletter to trustees, the regulator points out that for VAT periods starting on or after 1 April 2019, most VAT registered entities with taxable turnover above the VAT threshold (£85,000) will need to keep their records digitally and send their VAT return data to HMRC using Making Tax Digital-compatible software.

The Commission suggests trustees ensure a charity is ready for the change by undertaking a number of preparations. These start with looking at how the charity can keep records digitally. Where a charity currently uses commercial accounting software, it is recommended the trustees check with the software provider about when it will be Making Tax Digital-compatible.

Larger and more complex charities are recommended to assess their internal operations to make sure their end-to-end process is digital. The Commission is also advising charities to join the Making Tax Digital VAT pilot as soon as possible.

The regulator highlights HMRC advice that a small minority of organisations with more complex requirements have a six month deferral and will not be required to operate Making Tax Digital or VAT until a later deadline of 1 October.

This will apply to around 3.5% of mandated organisations who fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (government departments, NHS trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.

The Charity Commission newsletter also reminds trustees that for accounting periods ending on 31 March 2018, the deadline for submitting the 2018 return is 31 January 2019.

The regulator’s online service now requires those uploading annual returns to check all the charity details are correct on the register, and update them if needed, before submitting the return. Once this process has been carried out once, the details will be stored automatically.

The Charity Commission’s email addresses will be changing from 31 March and will no longer have .gsi in the address. The regulator says it will update all email addresses on its website in time for this change.

Brearley & Co can advise you in regard to your MTD requirements. Contact us if you need advice.