Making Tax Digital (MTD) for VAT registered businesses

Making Tax Digital (MTD) for VAT registered businesses

Making Tax Digital (MTD) began in April 2019 and HMRC continue to roll out their plans now and into the future. VAT-registered businesses above the £85,000 registration threshold are required to submit their VAT returns using ‘functional compatible software’ and store their VAT accounting records digitally. April 2022 sees the next phase of this Making Tax Digital rollout.

MTD for VAT changes April 2022

As of 1^st April 2022, all VAT registered businesses will be required to comply with the MTD regime for their VAT accounting.

This will affect all UK businesses registered for VAT with taxable turnover below the current threshold of £85,000. As the deadline is looming, we detail below all the things you need to know to help get your business ready and compliant with MTD for VAT.

Who is impacted by MTD for VAT in April 2022?

From April 2022, if your business is currently VAT registered, then using Making Tax Digital for VAT will be a requirement for your business. You’ll need to follow the MTD for VAT rules for the first full VAT period that falls after the 1^st of April and then subsequent ones.
 
The main aspect of MTD is that you need to ensure that you are keeping digital records for VAT purposes.

 If you’re already using cloud accounting software, then you may well be ready now for MTD for VAT. You’ll need to sign up for MTD for VAT via the HMRC website. However, there are still many businesses that don’t use compliant online accounting software and will need to now take on new software to comply with the regulations. 

If you are using spreadsheets or other manual records to prepare your VAT return, then you’ll switch over to online software and change your processes. There is software that can bridge the gap from a spreadsheet to online, however, it’s far better to adopt an approach of taking on new software to future proof your business.

Here at Haines Watts, we can help with the whole transition.

 Exemptions and deferrals from MTD for VAT

If you are a business that is considered digitally exempt then you may be able to claim exemption from MTD for VAT. These include people with religious beliefs that are not compatible with the requirements, or people whose age, disability or remoteness means it is not reasonably practical for them to use digital tools.

Check if your current software compatible for MTD for VAT

You will need to use software that is compatible with HMRC’s Making Tax Digital for VAT regime. Your software must be able to communicate electronically with HMRC’s portal, so you that you can file your VAT returns electronically. You can find out more here.

If you are using desktop accounting software, rather than a cloud based system, then you might need to update it for MTD. Some older software systems may not have been updated for MTD, so you’ll need to still look for new software. Contact us if you need help.  

If you’re not prepared yet, contact us now!

Time is running out, if you need to register for MTD for VAT and get compatible software, then contact us today.

We offer a full range of VAT and cloud accounting services, whether it’s filing VAT returns or installing and training you or your team on cloud accounting. Contact us at our offices in Wirral, Chester or Liverpool for further help and advice.