Making Tax Digital (MTD) for VAT is to become mandatory for all VAT-registered businesses and organisations from April 2022.
Businesses are reminded to take steps to prepare for MTD for Value Added Tax (VAT) before it becomes mandatory for all VAT-registered businesses from 1 April this year.
MTD is designed to help businesses eliminate common errors and save time managing their tax affairs.
MTD for VAT is part of the overall digitalisation of UK Tax. In a recent independent study of over 2,000 businesses, 69% reported experiencing at least one benefit from Making Tax Digital. These included preparing and submitting returns faster and increased confidence that they were getting tax right. 67% of businesses also felt Making Tax Digital had reduced the potential for mistakes in at least one aspect of the record keeping, preparing and submitting returns process.
As of December 2021, Government figures show that 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 Making Tax Digital 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.
While BM Connect can sign up on behalf of your business, businesses remain responsible for meeting their VAT obligations. Those who do not join may be charged a penalty for failure to do so.
- You need to ensure that you sign up to MTD at least 5 days after your last non-MTD VAT return deadline date, and no less than 7 days before your first MTD VAT Return deadline date or you may pay [for] your VAT twice.
- Businesses must keep digital records under MTD. This can be done through software. Where a business chooses to use bridging software, digital links must be in place to ensure that records are kept digitally as information is transferred between different platforms.
- Businesses need to have signed up to MTD for their first VAT return starting on or after 1 April 2022. They may not be required to make their first submission via MTD until Summer 2022.
If you have any concerns regarding your tax return or other related matters, our experts at BM Connect are available to assist. We take the hassle of dealing with HMRC away from you, so you don’t need to deal directly with them.
Contact Mariske Byrnes or your usual BM Connect adviser for further information and assistance.