9:00 am, November 7, 2019
SOME dealerships could be eligible for an extension to certain Making Tax Digital requirements.
The Making Tax Digital initiative from HMRC aims to end the tax return and bring in a transformed tax system by 2020, making tax administration more effective, more efficient and simpler for taxpayers.
Most VAT-registered organisations with a taxable turnover exceeding £85,000 and a non-complex IT system must introduce digital links in their first VAT return starting on or after April 1, 2020 or October 1, 2020 depending on their set-up.
But audit, tax and consulting specialist RSM is highlighting the fact that HMRC has announced that some organisations with complex or legacy IT systems can apply for an extension to the one-year ‘soft’ landing period to maintain digital links.
Philip Munn, VAT partner at RSM, said: ‘This may be of particular relevance to motor dealerships who use specialist finance and accounting software which may no longer be supported by the original provider. However, only those that apply can get the extension, so interested businesses shouldn’t delay.’
The extension is being brought in because of challenges faced by some businesses, such as different systems that aren’t integrated or supported by software providers so can’t be adapted to the new rules.
Cost alone won’t be seen as a good enough reason for an extension and the formal application requires details of existing systems to be mapped out, as well as a timetable to becoming compliant and controls to minimise the risk of errors.
Munn added: ‘Those considering making an application are advised to seek professional advice.
‘Although Making Tax Digital is likely to take time to implement and may well involve additional cost, many organisations are using the opportunity to review the VAT return process to identify efficiencies and to ensure it is completed in the most efficient way instead of following historic and legacy processes.’
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