Making Tax Digital for VAT
Making Tax Digital (MTD) 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.
VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are currently required to follow the MTD rules by keeping digital records and using software to submit their VAT returns. This is voluntary if you are below the VAT threshold.
However, from 1 April 2022 ALL VAT-registered businesses will be required to follow MTD rules for their first VAT return, starting on or after April 2022. This includes businesses with rental income.
What does this mean for you?
You will be required to digitally record your bookkeeping and submit VAT returns using MTD compatible software, so your VAT returns can be filed directly with HMRC via APIs (Application Program Interfaces) rather than through existing portals.
“Digital” records can include use of spreadsheets, but these will need to contain a digital link. Alternatively, you can use ‘bridging software’ to connect to HMRC systems from your current system.
If you do not currently have compatible software, you may wish to upgrade at your account’s year end, to avoid switching during an accounting year.
If you are VAT registered but not yet signed up to MTD, you will need to sign up to MTD for VAT – you will not automatically be transferred to MTD. More information can be found here: Making Tax Digital for VAT.
How can we help?
Let us help you take this opportunity to review your existing processes and embrace technology. This will provide better information recording and therefore better insight into your business, as well as freeing up more of your time to do what you do best.
We can assist you with your digital bookkeeping and VAT compliance using MTD fully compatible software such as Xero, where your VAT returns can be submitted at the press of a button.
We can also help you find a solution using simple to use bridging software, which creates a link from your current bookkeeping system to HMRC.
We can do all of this for you, or we are equally happy to help you set it up yourself – whatever works best for you. For more information, please contact Julia Wigram.
