Starting April 2020 the digitally linked VAT accounting data will have to be submitted to the tax authorities either periodically or on request. That data will be used to review whether the numbers of the nine VAT returns submitted are correct (tax audit (almost) real-time).
[Updated 2021] UK local entities have to submit from April 2019 the nine boxes of the VAT return to HMRC to 1) a different portal and 2) in an automated way. Starting 1 October 2019, this obligation is in force for overseas traders and VAT groups.
The period April 2019 till April 2021 is a soft landing period to allow taxpayers time to have in place digital links between all parts of their functional compatible software. For VAT periods commencing between 1 April 2019 and 31 March 2020 businesses will not be required to have digital links between software programs yet.
HMRC received the VAT return numbers of the nine boxes already electronically before April 1, 2019. The new way of submission during the soft landing period does therefore not provide HMRC with any new insights. The only difference is that filing should take place in an automated way as manual entry of the consolidated numbers of the 9 VAT return boxes is no longer allowed, and that submission of those numbers should take place via HMRC’s new API platform. At the same, HMRC sends back the response.
Starting April 2021 the digitally linked VAT accounting data we anticipate will have to be submitted to the tax authorities either periodically or on request. That data will be used to review whether the numbers of the nine VAT returns submitted are correct (tax audit (almost) real-time).
The suspension of penalties on late MTD filings after the soft landing period ends. These are based on the number of offences in the past 12 months and can reach 15% of the VAT due, increased with tax penalties of up to 100% of undeclared VAT.
What do we offer?
Our SAP add-on for MTD UK for VAT solution is without an external interface and can be implemented with no SAP impact in any other areas. Our solution is SAP release independent. We have developed 2 packages and various modules to satisfy various client needs based on the use of Standard SAP for VAT, and the current VAT return process.
Our 'Premium package' includes all our VAT features and can subsequently be complemented with client specific enhancements. To facilitate flexibility of clients that use standard SAP for the VAT return process, we have launched a standard package that contains all basically required VAT return submission directly from SAP.
What is an SAP add-on?
An SAP add-on enhances standard SAP itself.
Add-on components are extra functionalities that do not come with the main SAP product. Different organizations have different requirements. SAP has recognized that and facilitated that additional functionality can be added and that such functionality as a component can be integrated with Standard SAP.
An add-on is permitted by SAP – the code 'ABAP' is written and transported where SAP allows it. That means these add-on components sit above the core and access the same dictionary objects or repository objects and perform the required functionality. It contains custom authorization objects according to SAP standards.
SAP add-on solutions are, therefore, without an external interface or external software and can be implemented with minor or no SAP impact in any other area. An SAP add-on does not change the programming code of SAP. As a result, SAP upgrades do not lead to any problems, and maintenance is straightforward. Additional functionality is added to Standard SAP.
Written by Richard Cornelisse
Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.
He started his career as a manager at Arthur Andersen and then became an EY partner where he led the indirect tax performance team for Netherlands and Belgium. Currently, he is a managing director of SAP Tax Consultancy Firm.
Richard has over 20 years of experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service center migration, and post-merger integration work.