MTD: AVOID MUDDLES
If you believe the adverts, accounting software is really easy to operate - but that depends on it being set-up correctly.
When you use new software to submit VAT returns under MTD it must be configured for the particular circumstances of your business, for example:
• are you using the cash accounting scheme for VAT?
•if you use the VAT flat rate scheme (FRS), has the correct FRS percentage been picked within the software? or
• if bank-feeds are used does the software correctly code sales and purchases which are exempt, zerorated or standard-rated for VAT?
Unless you are starting a new business with new software, the historical 'opening balances' will have to be typed into the new programme or read in automatically from the old software.
We suggest that you check a draft VAT return before attempting to submit it under MTD. We can help you with this.
If you have already submitted a VAT return under the MTD pilot it is not too late to check the figures.
Penalties for mistakes in VAT returns can be up to 100% of the VAT underpaid and still apply if the return is submitted under MTD.
If you have had a genuine problem with setting up your MTD software this may constitute a reasonable excuse for a mistake in reported figures but you must correct the error as soon as it is discovered.
This article is extracted from the June 2019 Newsletter.