MTD Update & Additional PwC Offer for BUFDG members

As previously reported, HMRC published its latest MTD policy paper on 16 October 2018, which extends the deadline for submitting VAT returns through software to 1 October 2019 for certain types of organisations. This link includes a very useful Making Tax Digital for VAT Timeline. 

Although MTD is still expected to be mandated for organisations that trade with the EU in line with the initial 1 April 2019 go-live date, this date will be deferred to 1 October 2019 for business falling into the following categories:

• Not for profit organisations that are not set up as a company
• VAT groups / VAT divisions
• Overseas traders
• Entities making payments on account
• Annual Accounting scheme users
• Public sector entities required to provide additional information on their VAT return
• Trusts
• Local Authorities / Public corporations 

HMRC has also announced that during the first year of mandation, HMRC will not pursue filing or record keeping penalties where businesses are doing their best to comply with the law.

What does this mean for you?

The MTD rules still apply as before, but universities that are members of a VAT group, public corporations, certain not for profit organisations, or those that fall within the POA regime will have extra time to comply with the rules. (It is unlikely that any university would fall within HMRC’s definition of a 'not for profit' organisation not set up as a company.)

Those universities affected by these changes will be required to submit the January 2020 VAT return as the first MTD compliant return. 

Although this has the benefit of allowing universities extra time to prepare for MTD, the first VAT return due under the new rules will fall at a time when most HE institutions are calculating the Partial Exemption annual adjustment and preparing to calculate the annual Capital Goods Scheme adjustment. It is therefore even more important to ensure that functional compatible software used is tested on previous periods.

Please also note that any separately VAT registered subsidiaries which do not fall within the criteria listed above will still be required to be MTD compliant from the first VAT return period starting on or after 1 April 2019. 

Suggested next steps 

The updated timeline has not made any changes to the rules taking effect from 1 April 2020. Currently all organisations will be required to comply with the more stringent MTD rules from this date. 

There will therefore be a much shorter period than anticipated between HMRC's 'soft landing' and the implementation of the 2020 rules and the digital record requirement. It would be prudent to  take this opportunity to reconsider how you intend to prepare for MTD and re-appraise your current plan and approach e.g. does it now make sense to prepare for both the 2019 and 2020 rules in a single step process?  

GITC: PwC's end-to-end Digital record and filing MTD solution tailored for universities

As part of this re-appraisal you may wish to consider PwC’s GITC tool further - the PwC Global Indirect Tax Compliance solution. You can find out more in this document setting out the details of GITC, as well as the BUFDG and PwC GITC webex recorded in the summer which includes a discussion about MTD and a demonstration of GITC. (If you are struggling to view - saving to your desktop and then opening can help).

In summary, GITC is VAT partial exemption solution, fully compliant with MTD and included on HMRC’s approved software supplier listing for MTD. It is also the only solution tailored for universities, being implemented by universities and the only one to have undertaken a live filing for a university. 

It is a compliance application and a framework with embedded analytics that allows better analysis of VAT across the university. It can also be configured to support corporation tax preparation and PSA analysis. It records and maintains all calculations and changes to data, enabling a one stop shop application to handle compliance and HMRC audit defence. As a web-based tool it is a self-service tool and includes an end-to-end process from data extraction to the creation of e-filing of the VAT return resulting in:

• Reduced manual data manipulation and management, leaving additional time for analytics and quality testing, as well as the many other tax issues demanding your time unrelated to the VAT return;
• Better quality with reduced risk: Auto population, correction, and enrichment makes data more reliable and reduces errors;
• Reduced disruption: Less time spent correcting data that is missing or coded/treated incorrectly.

Implementation consists of an upfront configuration for which there is a fixed fee followed by an annual licence fee for use of the software solution, updates and maintenance set out in the pricing summary.

API/Digital Bridge Option & Offer

For those universities considering that they only require a digital bridge or e-file to submit their VAT return, PwC also has a digital bridge option costing approximately £90 (plus VAT) per VRN per annum.

In addition, where universities decide they wish to go forward with GITC, PwC will refund fees incurred in relation to this digital bridge/e-file upon implementation of GITC.

If you have any questions regarding HMRC's announcement, or MTD and PwC's solutions more generally, please contact Amanda at BUFDG, or contact Lesley Graham or Jen Lee at PwC directly.