Making Tax Digital and Microsoft Dynamics

Making Tax Digital (MTD) is HMRC’s strategy to modernise tax systems. It came into effect in April 2019 and affects every organisation from processes to how systems are set up to record and report tax.

For finance professionals this represents a large change with a period of uncertainty, will their system be compliant and what will this look like?

For single VAT entities, those on Microsoft Dynamics 365 and some versions of AX are MTD compliant.  However, for VAT groups, organisations will require VAT group MTD compatible software to send VAT returns to HMRC.

This page answers some of the core questions you might have around Making Tax Digital and Microsoft Dynamics and Incremental Group’s Making Tax Digital Modules for Dynamics – for both single entities and VAT group entities.

What is Making Tax Digital?

Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

  • more effective;
  • more efficient;
  • easier for taxpayers to get their tax right.

Who will be affected when changes come into force?

The Making Tax Digital VAT timeline is April 2019, except for the businesses that have been deferred. Making Tax Digital is mandated for all VAT-registered businesses with a taxable turnover above the VAT threshold. Making Tax Digital for group VAT returns has been extended to October 2019.

What versions of Microsoft Dynamics and Dynamics 365 will be Making Tax Digital compliant?

For single VAT entities, the following versions are either compliant or will have received an update before April 2019.

Dynamics 365 for Finance and Operations and Dynamics 365 Business Central

Dynamics AX 2012 R3

Dynamics NAV 2015, 2016, 2017 & 2018

Dynamics GP 2016 & 2018

What is submitted to HMRC?

Only the report fields are submitted to HMRC. This does not include detailed transactions.

How long will I need to keep digital records for?

Businesses will need to keep digital records for up to 6 years.

What records do I need to keep digitally for MTD for VAT?

MTD does not require you to keep additional records for VAT, but to record them digitally.

Your digital records should include, for each supply, the time of supply (tax point), the value of the supply (net excluding VAT) and the rate of VAT charged. They should also include information about your business, including business name and principle business address, as well as your VAT registration number and details of any VAT accounting schemes you use.

What user roles are required for the Making Tax Digital parameters?

This question refers directly to the Making Tax Digital Module for Microsoft Dynamics by Incremental Group.

Entry Point access:         Full control

Role (AOT name):            INC_MTDadministrator

Role name:                     Making Tax Digital module administrator

Duty (AOT name):             INC_MTDParametersMaintain

Duty name:                     Maintain the Making Tax Digital module parameters

Privilege (AOT name):             INC_MTDParametersMaintain

Privilege name:               Maintain the Making Tax Digital module parameters

 

No user licence required

Entry point name: INC_MTDParameters

How do I get user credentials from HMRC?

Before the Incremental Group Making Tax Digital module can be configured or used, the client will have to register with HMRC for Making Tax Digital in order to get the required credentials.

Businesses submitting their own VAT returns only need to Authorise MTD compatible software and Sign up to Making Tax Digital (MTD). They can do this using existing government gateway (GG) ID if they have one OR they can set up a new one.

I have signed up for MTD returns but our compatible software is not yet ready?

Once signed up to MTD returns MUST be submitted using MTD compatible software; do not sign up unless you are ready.

What other information needs to be provided to HMRC?

Where a business pays by direct debit an email address must be provided. Business that pay by direct debit have to sign up at least 15 working days before they need to submit.

Will I receive instructions for the installation/configuration of the module?

Incremental Group supplies full installation and configuration information along with the Making Tax Digital Modules, for both the single VAT module and the group VAT module. Where required, we can also assist with installation.

Does the Incremental Group solution allow for merged VAT returns?

Incremental Group solution has 2 product modules available:

Product 1 – A single return is sent to HMRC per legal entity that is Making Tax Digital module enabled for VAT returns. The Making Tax Digital VAT timeline is April 2019.

Product 2 – A consolidated VAT return for more than 1 legal entity. Making Tax Digital for group VAT returns has been extended to October 2019.

Discover more about our Making Tax Digital Module.

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