HMRC are in the process of making MTD (Making Tax Digital)  mandatory for all VAT registered clients from 01/04/2022.

If you are compulsory VAT registered (ie have turnover over £85k), then you should already be signed up for MTD. But if not, then you will need to consider how this will affect you.

 

Background

MTD requires software to submit the tax returns direct to HMRC, rather than inputting the 9 boxes onto HMRC’s website. See the links at the bottom of this article to understand more about what MTDfVAT is.

If you are on a bookkeeping software such as Xero or QuickBooks, this can be used to send data directly to HMRC, and MTD will not affect you signifcantly.

However if you keep your bookkeeping records in manual or excel form, you will need to use “bridging software” to file your returns each quarter, or move to software.

All businesses must keep their VAT records digitally.

 

MTD Sign up

Regardless, of which methodology you retain your records, you will need to sign up to MTD on HMRC’s website, prior to filing your first VAT return. This can take some time to take effect, so please do not wait until your first VAT return’s filing date to think about doing so.

Here is the link that you will need – https://www.gov.uk/vat-record-keeping/sign-up-for-making-tax-digital-for-vat.

 

If you want to use bridging software, there are a number of free and paid for apps to help you.

We can not recommend any specific one, but have tested the following:

• Absolute Accounting Software LTD – https://www.absoluteexcelvatfiler.co.uk/pages/absolute-excel-vat-filer
• VT Software – https://www.vtsoftware.co.uk/

There are many software options available for you to test, and see which you prefer and that meets your needs.

 

Deadlines

For businesses that are new to MTD because of the April 2022 deadline, such as voluntary VAT filers; you must start following MTD from the first day of your first VAT period that starts on or after 01/04/22.

You can sign up earlier, of course, but the latest dates are as follows:

If your VAT period has a 31 March 2022 end date, your first VAT quarter under MTD for VAT starts 1 April 2022.
If your VAT period has a 30 April 2022 end date, your first VAT quarter under MTD for VAT starts 1 May 2022.
If your VAT period has a 31 May 2022 end date, your first VAT quarter under MTD for VAT starts 1 June 2022.

Please use this month to start looking at your options, ready for MTD for VAT.

 

We understand that MTD for VAT is a significant change in the VAT filing process so if there is anything we can help with please get in touch.

 

Futher information

Please see the following links to help you understand this change better:

• HMRC general guide about MTD for VAT –  https://www.gov.uk/vat-record-keeping/making-tax-digital-for-vatBeing
• Moore Accountanc guide about MTD from 2 years ago, when compulsory registered companies had to conform to MTD – https://mooreaccountancy.co.uk/making-tax-digital-mtd-more-detailed-information/