Making Tax Digital (MTD) for VAT is being introduced by HMRC next year and presents a huge change for dealers, as HMRC seeks to digitise the administration and collection of tax.

However, there are a number of misconceptions regarding MTD which could catch the sector out, according to Andy Gott, associate director at RSM UK.

Here, Gott provides some clarity to help car retailers navigate some of the myths related to the technology’s roll-out.

1) HMRC will be too busy with Brexit and it won’t happen

HMRC is pushing ahead with the introduction of MTD and want it to be in place as soon as possible.

Although the date has changed slightly for some organisations, leaving any planning to the last minute is a risky strategy.

2) MTD has been delayed, so I don’t need to deal with it just yet?

Many dealerships will be classed as complex, and the deadline for compliance has been pushed back until 1 October 2019; so, these dealers will have an extra six months to prepare.

However, for some dealerships that are not classed as complex, the 1 April 2019 deadline remains.

3) I just need a link to HMRC

The link (or API) is one of three key aspect to MTD. A business must also make sure it’s data is in a MTD compliant format and that any changes that occur to the data, occur digitally. It’s unlikely that dealerships will be MTD compliant by just having the link.

4) Our DMS software provider will provide the solution for Making Tax Digital

Many software providers are providing users with the ability to make the MTD submission through the software, however this position will depend on amongst other things; the software provider, the version of the software in place and whether you are in a VAT group or not.

Even if the software provider will provide the software to make the submission, it won’t solve all the MTD issues that a business may have with its data format and the adjustments to the data that it makes.

Even where the accounts provider will offer the API link there are still a lot of things for a business to consider further.

This is very much the start of the tax digitisation process and it is expected that further measures will be introduced to MTD for VAT compliance along with, in time, the digitisation of other taxes.

In the meantime, dealerships should consider which steps are required in an order to be MTD compliant as soon as possible.