MTD For VAT – the next stage

What is Making Tax Digital?

Making Tax Digital (MTD) is a regime brought in by HMRC to ensure that VAT returns are accurate and delivered in a timely fashion. Businesses caught by the new rules have to

  1. Keep all their bookkeeping records digitally; and
  2. File their VAT return direct from software

MTD for VAT was introduced in April 2019 for all VAT registered businesses who had a turnover in excess of £85,000 in any 12 month period, i.e. those business or organisations who legally had to register for VAT.

What is changing in 2022?

No rules are changing BUT From 1 April 2022* any business, organisation or individual registered for VAT must comply with the MTD rules and regulations. Not only does this mean software for the recording of all sales, purchases and bank transactions, but also the submission of the VAT return via software.

I will be affected from April 2022 – what do I need to do?

You will need to register for MTD and you will need to chose some software to record your transactions and submit to HMRC if you don’t already have some. Below are some steps to how to approach the changes

  1. Complete you next return as normal**
  2. Once completed, sign up for MTD on the Gov.uk website
  3. Choose your software
    1. For small businesses we recommend Quickbooks Online, Xero or Freeagent. Please get in touch with your manager at MHA Moore and Smalley for some advice or to our digital team direct using the email digitalsolutions@mooreandsmalley.co.uk
    1. You can choose to use excel to record your transactions. This is compliant with the digital record keeping element of the MTD rules. However, you can’t submit the return to HMRC from Excel, so you will need to purchase bridging software.
  4. Link your software to HMRC via the API within the programme
  5. Send your next VAT return directly from software

*the rules commence for the VAT returns starting on or after 01/04/2022 so it relates to the filing of a monthly return in April and thereon, or the quarterly returns ended 30/06/2022, 31/07/22 and 31/08/22.

**if you have already filed you VAT return to 31/3/2022 when reading this, you must sign up immediately and not wait until the next VAT return has been submitted.