HMRC has officially listed Pegasus as a software supplier with VAT compatible products in development with Opera 3.
What is Making Tax Digital for VAT (MTDV)?
MTDV is a government initiative designed to transform the tax system and to make it easier for individuals and businesses to pay the correct tax. From 1 April 2019, under MTDV, VAT registered businesses (taxable turnover above £85,000) will be required to keep records digitally and submit VAT returns electronically to HMRC.
Specifically, under MTDV, the software which businesses use must be able to store and maintain records as specified in the regulations, prepare their VAT Returns using the information maintained in those digital records and communicate with HMRC digitally via their new Application Programming Interface (API) platform.
Note: Where MTDV applies to a business, that business will no longer be able to use HMRC’s online VAT submission portal; VAT returns must be submitted from software using HMRC’s new API platform.
For businesses mandated to use MTDV it applies from the first VAT period starting on or after 1 April 2019 (a ‘VAT period’ is the inclusive dates covered by a VAT Return).
Below are a couple of examples to illustrate when a business, who will be mandated for MTDV after 1 April, will have to adhere to MTDV:
Example 1: A business submits a quarterly return, and their next return covers the period 1 March to 31 May 2019. As the whole of the VAT period is not on or after 1 April 2019, the business will need to start complying with MTDV rules from 1 June 2019. This means the VAT return for the period 1 March 2019 to 31 May 2019 will be submitted using Online Filing Manager or HMRC online portal.
Example 2: A business submits a quarterly return, and their next return covers the period 1 April to 30 June 2019. As the whole of the VAT period is on or after 1 April 2019, the business will need to start complying with MTDV rules from 1 April 2019.
What does this mean for Opera 3?
Firstly, Pegasus will be implementing the necessary mandatory changes for MTDV in Opera 3 v2.60.00 for all variants – Server Edition, SQL and VFP.
A new version of the Pegasus Scheduler v2.20.00 is also required as this will be used to communicate to HMRC and to submit the VAT return.
It will also be a prerequisite for customers to update to .NET Framework 4.7.2.
Opera 3 v2.60.00 will also include the statutory Payroll changes for 2019/20 and the release is scheduled for the end of January 2019.
OPERA 3 FUNCTIONAL CHANGES
Opera 3 MTDV has been designed to allow the customer to specify when the company is required to declare their VAT submissions under MTDV. This is achieved by a MTD for VAT indicator to turn on MTD VAT in Company Profiles. This will then allow access to a new MTD VAT Centre.
New fields for MTDV in Company Profiles include:
- A date field that HMRC has confirmed as the MTDV start date for the company
- An indicator to state that the MTDV submission is being made by an agent on behalf of the customer
- The company’s group company for VAT consolidation purposes
- The VAT Accounting Scheme - for example, quarterly
Turning MTDV on will allow access to a NEW VAT Centre within the System application. It is within here that much of the VAT related processing will occur; this includes the running of VAT reports, EC VAT declarations as well as committing the VAT transactions to the selected VAT period before processing any final VAT adjustments and submitting the MTDV compliant declaration to HMRC.
The VAT Centre will use HMRC APIs to give Opera 3 the ability to submit the VAT box information to HMRC and to provide the information on what VAT period HMRC are expecting to be filed next and when. It will also provide information on the success of previous submissions, the detail of which will be retained.
The Pegasus Scheduler will be used to create the submission and ultimately communicate with HMRC within the VAT Centre. To do this securely, the Pegasus Scheduler has received a technical uplift to use .NET Framework 4.7.2 as well as uplifting several DLLs. Pegasus has also taken the opportunity to uplift the application to use the WiX installer, the installer used with Pegasus Web Xchange and Opera 3 SE (Server).
Where MTDV is not in use, i.e. either the Start Date is in the future or the company is outside of the inclusion scope for MTDV then the filing of the VAT100 will be the same as before i.e. updating using the VAT Online form and Pegasus Online Filing Manager.
To enable customers to enter their VAT return adjustments a new VAT transaction type ‘J’ has been added which will allow customers to define multiple VAT adjustment codes and specify which VAT boxes will be adjusted with full audit traceability. These adjustments can be processed in the VAT Return Adjustment posting routine.
Company VAT Consolidation – This new functionality is scheduled to be in the v2.60.00 release. In the unlikely event that Company VAT Consolidation is deferred, Pegasus will look to issue another update for those customers who require this functionality before it is required.
To ensure compliance with this important new legislation, then please contact your Account Manager at IT Lab.
The above is for information only and may be subject to change at the discretion of Pegasus