Making Tax Digital (MTD)
*****Hot off the press******
Cumulative updates for Nav 2015, 2016 and 2017 now available. See below for links.
Don't fancy completing a complete update to get MTD? We completed our Nav 2017 update for MTD only without implementing all of CU25. Contact us for more details.
What is MTD? Does it affect our business?
MTD is 'making fundamental changes to the way the tax system works - transforming tax administration so it is more effective, more efficient and easier for tax payers to get it right'. [source]. It covers all tax but as the deadline for VAT MTD is early next year this page will focus on that.
If you are registered for VAT and your taxable (standard, reduced, zero rated) turnover exceeds the current VAT registration threshold, VAT MTD affects you.
What is the requirement and therefore change to the current process
The requirement under VAT MTD is that all transactions are captured as near to real time as possible in record keeping software and that VAT 100 submissions are completed directly (interfaced) from the record keeping software.
Dynamics Nav is record keeping software. The content of the VAT 100 submission remains unchanged.
When is MTD VAT going live?
It is now live! For current businesses who are already VAT registered, the first effective period / quarter is the first one that starts after 1st April 2019.
Dynamics Nav and MTD
There are a number of versions of Dynamics Nav in use ranging from v2 to v 2018.
Dynamics Nav is published by Microsoft Corp and each publication includes country specific versions. So in the UK we have a GB version.
The VAT MTD is specific only to the UK. So Microsoft UK are responsible for liaising with HMRC to ensure all supported versions of Dynamics Nav will be VAT MTD compliant.
The expectation is that this will involve a development to allow the transmisson of VAT returns directly to HMRC VAT databases.
Supported versions of Dynamics Nav start at v 2015 - this assumes Microsoft uses the main stream support date and not extended support date. Using this mainstream support date, all other versions as of August 2018 are not supported and therefore there will be no solution provided by Microsoft.
If Microsoft define supported versions using the extended support date, all versions after v5 are included and therefore Microsoft UK will provide a VAT MTD solution.
Details of the Microsoft UK view of VAT MTD for Dynamics Nav are here. Details of Dynamics Nav life cycle by version are here.
Useful links to cumulative updates
All the below links refer to MTD in the UK specific element to the CU. But beware of implementing the full CU onto your database without backingn up first. Better tom implement the MTD elements - the relevant objects are listed under each link.
Pre Nav 2015 versions are not supported by Microsoft and so no MTD update will be provided by MS. Dynamics Nav 2018 has had MTD included for some time.
FPC use Dynamics Nav 2017 (W1 version 13682 which is the original release version) and we have just recently added the MTD functionality with CU 25 without implementing all the changes within this CU. So we have now MTD within our Nav 2017 W1 app.
How to configure and use MTD
Some useful links on configuring and using the new functionality in Nav 2015, 2016, 2017 and 2018:
What does HMRC define as an interface?
This is an interesting one especially when considering older non Microsoft supported versions of Dynamics Nav. The HMRC definition of functional compatible software is a program or set of programs that keeps digital records and will provide HMRC VAT returns via API. If it is a set of programs rather than a single program then there must be a digital link.
So this does preclude using, say, Jet (Express from v 2009, paid for versions for pre v2009) to get the data required from the Dynamics Nav database into Excel as long as someone develops an excel type addon or bridging software to allow the VAT data to be API'd.
Equally it does not preclude using SQL Queries. This presumes the Dynamics Nav database is a SQL database.
What you cannot do is load a file onto a HMRC web page. This fails the interface / API test.
But also bear in mind there is likely to be a transitionary period but this has to be confirmed by HMRC. They currently refer to it as 'soft landing' but more details will follow from HMRC hopefully soon.
Next steps
Get registered with HMRC for MTD VAT (yes this is a separate registration and is required) and confirm how your first MTD VAT submission will be made - via Dynamics Nav (v2015 onwards) / Dynamics 365 Business Central or a 3rd party software tool.