Making Tax Digital for VAT is coming

by Susie Hughes at 12:55 14/01/22 (News on Business)

HMRC is reminding businesses to take steps to prepare for Making Tax Digital (MTD) for Value Added Tax (VAT) before it becomes mandatory for all VAT-registered businesses from April 1, 2022.

MTD is designed to help businesses eliminate common errors and save time managing their tax affairs, and is part of the overall digitalisation of UK Tax. Advertisement As of December 2021, nearly 1.6 million taxpayers had joined MTD for VAT with more than 11 million returns successfully submitted. Around a third of VAT-registered businesses with taxable turnover below £85,000 have voluntarily signed up to MTD for VAT ahead of April 2022, and thousands more are signing up each week. Since April 2019, businesses with a taxable turnover above £85,000 have already been required to follow MTD, keeping digital records and filing VAT returns using MTD compatible software. In July 2020 it was announced that all VAT registered businesses must file digitally through MTD from April 2022, regardless of turnover. HMRC is now reminding businesses below the £85,000 threshold of the steps which they need to take to be ready. To sign up to MTD VAT, businesses, or an agent on a businesses’ behalf, need to: Step 1: Visit GOV.UK and choose MTD-compatible software; Step 2:Keep digital records starting from 1 April 2022 or the beginning of their VAT period; Step 3:Sign up and submit their VAT Return through MTD. Easier HMRC advises that if businesses have not yet signed up to MTD for VAT, they should do so now to ensure they are ready in time for the April 2022 deadline. Joanna Rowland from HMRC, said: “MTD is fundamental to the delivery of a trusted and modern tax system, making it easier for businesses to get their tax right and supporting the UK to go digital. “By signing up for MTD, we expect most businesses to experience long-term benefits, including reduced errors and time saved in managing their tax affairs. “We encourage businesses to explore digital record-keeping for their VAT affairs and use this time to choose the right software to support their business needs.” Small businesses National Chair of the Federation of Small Businesses (FSB), Mike Cherry, said: “We have worked hard to ensure Making Tax Digital launch dates were adjusted to give small businesses more time to prepare and allow more competition to open up in the accounting software market. It’s important that firms do all they can to get ahead of deadlines and access the affordable platforms that are now available; if they are members of FSB, they will have access to a new easy MTD member service that we are creating. Advertisement “We’ll continue to work with Government, and through our support services, to minimise the admin and cost impacts of MTD on small firms whilst unlocking the productivity gains the initiative could bring.” Businesses can find help and support on how to sign up for MTD - VAT record keeping - on GOV.UK. Agents can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. Those who do not join may be charged a penalty for failure to do so. For businesses who need help and support on signing up for MTD, HMRC is running a series of webinars. More information can be found on HMRC’s MTD help page. There are a range of compatible software products available for MTD for VAT, allowing businesses to choose which tools they use to run their business and tax affairs. A list of software compatible with MTD for VAT, including low-cost options, can be found here. Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2022

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