The first phase of digital change within the HMRC was introduced on 1 April 2019. MTD, Making Tax Digital, requires VAT-registered businesses with a taxable turnover above the VAT threshold to keep digital VAT business records and send VAT returns using Making Tax Digital-compatible software.

As part of the ongoing transformation to support this transition, HMRC needs to consolidate all customers onto one system and allow decommissioning of the old VAT system.

What does this change mean for businesses?

From 8 April 2021, the HMRC will no longer be able to accept XML VAT submissions from third-party software.

Businesses still using third-party software that only allows an XML submission will need to find an alternative method of submission from April 2021.

At Kick, we already support the new API submission method and can advise both customers and prospects on adding this MTD feature to Dynamics NAV or Business Central.

MTD and Business Central / Dynamics NAV

Business Central already supports submitting VAT returns to HMRC using the GovTalk service. At Kick, our team also offer an MTD solution for Dynamics NAV too.

Set up Making Tax Digital for VAT – Business Central

The Making Tax Digital feature uses a service connection to communicate with HMRC. To make it easy to establish communications, Business Central provides the HMRC VAT Setup service connection, which contains most of the information needed to communicate with HMRC.

To finish the connection, you must give the Dynamics 365 Business Central MTD VAT application the authority to interact with HMRC on your behalf.

For assistance in setting up this feature, get in touch with one of our experts. We’re here to help.