MTD UK for VAT 1 April 2021

UK local entities have to submit since April 2019 the nine boxes of the VAT return to HMRC to 1) a different portal and 2) in an automated way. Starting October 1, 2019, this obligation is in force for overseas traders and VAT groups.

April 2019 till April 2021 is a soft landing period to allow taxpayers time to have digital links between all parts of their functional compatible software. For VAT periods commencing between April 1, 2019, and March 31, 2021, 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. Therefore, the new way of submission during the soft landing period does 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.

Any manual adjustments are made in the SAP cockpit, and those will contain audit trails. The (corrected) VAT accounting data remains in SAP, and a digital link is not needed. The portal that HMRC has set up can handle big data and we anticip[ate that the UK authorities will request - similar as for SAF-T Poland - that either periodically or on request, the VAT accounting data have to be submitted as well. 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. The penalty is based on the number of offenses over the past 12 months. The amount can reach 15% of the VAT due, increased with tax penalties of up to 100% of undeclared VAT.

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 two packages and various modules to satisfy multiple 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 complement client-specific enhancements. To facilitate clients' flexibility that use standard SAP for the VAT return process, we have launched a standard package that contains all required VAT return submissions directly from SAP.

The SAP add-on extracts all the relevant VAT return data from Standard SAP to calculate the nine boxes of the VAT return:
  • The add-on transforms the VAT accounting data into final numbers of the nine boxes of the VAT return in a legally required JSON format.
  • The add-on developed and approved by HMRC generates the JSON file automatically, and the Client can submit the VAT return to HMRC and retrieve liability and payments reports.
  • Functionality for effective and eficient mannagement of VAT in SAP is possible via the SAP add-on Cockpit.
  • The SAP add-ons support all HMRC's APIs.
  • In the cockpit of the SAP add-on, manual adjustments or relevant VAT data can be added. The add-on can display these changes made and therefore contains audit trail functionality. In the add-on and standard VAT controls to test whether the source data contains VAT errors.
  • All information is available in SAP or can be archived on a local server. The Client can provide quickly to HMRC when HMRC requests that data for tax audit purposes. Starting April 1, 2021, when it becomes mandatory, the Client can submit the underlying VAT accounting data. The underlying digital VAT accountancy data is available in the cockpit and can be sent in a JSON file when the tax authorities request that information.
  • Manual corrections in the add-on with an audit trail of the VAT result, i.e., easy to follow initial results +/- modifications to final VAT result. The digital accountancy data is archived in SAP and can be stored on a local server.
  • Reconciliation of VAT result and GL balance on VAT accounts
  • Reconciliation VAT results and other reports if applicable, e.g., VIES, Intrastat, etc.
  • Linkage with clients existing calculation files if applicable or requested
  • Any enhancement based on the Client's requirements is feasible as the add-on can be tailored based on client demands.
  • Many multinationals have our MTD UK add-on operational.