May 22, 2020 9:54:26 AM by Garry Davis

Making Tax Digital 2020 (MTD) update for Dynamics Business Central (Navision / Dynamics NAV)

Business Central, Making Tax Digital Navision, Microsoft Dynamics 365, Microsoft Dynamics NAV, Technology

The “soft landing period” has been extended

The Making Tax Digital 2020 (MTD) for VAT “soft landing period” has been extended from April 2020 to April 2021. This means that the first VAT return that requires a proper ‘digital link’ will be your first return after April 2021.
However, as discussed in this post, there are many positives to looking into getting this set up now.

Firstly, as you are probably aware, MTD for VAT requires you to:

• have & preserve digital records; and
• digitally submit that information & your returns to HMRC, by using their API platform; and
• receive information via HMRC’s API platform
From HMRC’s web site, the below (non-exhaustive) points are considered to be a viable list of ‘digital links’:
• emailing a spreadsheet containing digital records so the information can be imported into another software product
• transferring a set of digital records onto a portable device (for example, a pen drive, memory stick, flash drive) and physically giving this to someone else who then imports that data into their software
• XML, CSV import and export, and download and upload of files
• automated data transfer
• API transfer

Note that outside of this “soft landing period”, copy (or cut) & paste are not considered a digital link.

Get Ready for Making Tax Digital 2020 (MTD) Now

Just because it has been postponed, does not mean you should delay getting ready for April now. Setting your VAT submission to be MTD ready will deliver time savings & confidence in the numbers now.

Having all your information in one central system does make your life easier. It makes VAT submissions a simple, stress-free process.

One thing we have noticed while implementing MTD for new Business Central customers – as well as assisting customers & partner of older Navision / Dynamics NAV versions – is that many do not have their “VAT Statements” set up properly on the system.

It can take time to do this but, once done; it removes the headache out of VAT reporting. And besides, we have created a tool that speeds up the setup process.

Reporting VAT from the General Ledger

A common trend we have seen is for some businesses to create a ‘short cut’ and perform VAT Reporting based on information in General Ledger. This is fine for MTD, so long as you use this information from the VAT Statement.

There are benefits to using the inbuilt Calc & Post VAT Settlement routine, and we plan to discuss the merits of this approach vs the General Ledger approach in a later article.

Whichever way you get to your information, we do advise that you get the benefits of using the VAT Statement feature in your Business Central / Dynamics NAV / Navision solution and set it up sooner rather than later. You are going to have to do this as some point anyway!

Bridging Solutions

While bridging solutions (3rd party apps) that take your VAT Information and submit those to HMRC is still valid – for the foreseeable future anyway – the intention for MTD is for information to flow from your accounting system to HMRC with no manual intervention.

So even if you are not sending information from Business Central (via the standard feature) or Dynamics NAV / Navision (possibly with our Add-on or a bridging solution), it is still a good idea to set this up for yourself now. It takes the manual effort out of submitting VAT returns & removes the risk of data entry errors. That is good for business, not just to comply with HMRC.

Group VAT in Business Central

Group VAT has been something missing from the standard product. It is something we have customised to help companies solve in simple Group VAT Reporting setups.

The good news is that Group VAT structures are due to be included in future versions of Business Central. Currently, the aim is for October 2020 but, as with any software roadmap, features are subject to change.

Further Information

For more information about where you stand on Making Tax Digital 2020 for VAT, read more in HMRC’s VAT Notice 700/22: Making Tax Digital for VAT.

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