MTD for VAT: Act now if you are not registered for VAT

MTD (Making Tax Digital) for VAT was brought in back in April 2019 and initially was for individual businesses that had a taxable turnover of £85,000 or more.

From October 2019, Groups, Pension schemes, charities and other entities with taxable turnover over £85,000 had to join.

The latest changes, effective from 1 April 2022, apply to all remaining businesses who have not yet registered for MTD for VAT – i.e those voluntarily registered for VAT. If not already signed up, these businesses must now sign up for MTD for VAT and they must comply with the rules.

What are the rules for Making Tax Digital for VAT?

The rules, simply put, are:

1.         You must keep digital records

2.         You must file your VAT return via compatible software

Digital records include using accounting software such as Quickbooks Online, Xero, FreeAgent and Sage (not an exhaustive list) or Excel.

If you use compatible software you will be able to comply with the digital rules as well as linking the software to HMRC to submit VAT returns direct. We highly recommend using the software as not only does it make the submission process easy, but the software will also save you time in terms of bookkeeping tasks. Not only this you will have far more information available to you, which will enable you to make faster, more informed business decisions.

What if I use Microsoft Excel?

If you choose to use Excel, then you will need to purchase bridging software to enable you to file the return with HMRC.

There are some complex “digital links” rules to comply with so if you have other systems recording your sales or costs, please do speak to your accounts manager to see how you can best “link” the information together to allow your business to fully comply with the rules.

MHA Moore & Smalley can help your business with Making Tax Digital

We have bookkeeping software available from £10 plus VAT per month (and for free if you have a business bank account with NatWest) and bridging software available from £20 plus VAT per annum.

We offer full training on all software we recommend and this starts from £100 plus VAT.

If you don’t yet have a separate business bank account, we can recommend solutions that will include free software.

HMRC will have the power to impose fines on businesses that do not comply. We urge businesses to act sooner rather than later to ensure you can be set up in time.

For a free consultation on how we can help you and your business, please fill in the form below: