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.
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.
Currently the deadline for VAT MTD is April 2019. For current businesses who are already VAT registered, the first effective period / quarter is the first one that starts after 1st April 2019.
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.
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 well before April 2019.
Currently there is no solution from Microsoft UK for Dynamics Nav v2015 onwards.
There is no definitive process for complying with VAT MTD except the requirement for an interface and end user's no longer able to complete VAT returns off a HMRC login off the web - from April 2019.
So the next step is watch this space for what the final requirement is from HMRC, the solution proposed by Microsoft UK for Dynamics Nav, what (if any) are the transition arrangements and what (if any) 3rd party software has been developed to enable interfaces between old versions of Dynamics Nav (pre v 2015) and HMRC VAT databases.