WHAT IS MTD for VAT?
In April 2019 the government started a new initiative to make it easier for businesses and individuals to complete and file their VAT returns. This meant that VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 were required to keep digital records and use software to submit their VAT returns.
From April 2022 MTD for VAT will include VAT-registered businesses with a turnover below £85,000. MTD for VAT will become mandatory, and businesses will no longer be able to keep or submit manual records. HMRC will only accept compatible software packages (such as Xero, Sage or QuickBooks) or other software (like spreadsheets) that connect to HMRC systems.
From April 2024 MTD for income tax self-assessment (MTD ITSA) will also apply to individuals.
DO I NEED TO REGISTER?
MTD enrolment is automatic if you’re signing up for VAT for the first time. However, if you’re voluntarily registered for VAT, the latest you must register for MTD for VAT is before the end of your first full VAT period following April 2022. To avoid issues with previous VAT Return payments if using direct debit, you must not sign up less than:
- Seven days before your first MTD VAT Return is due
- Five days after your first MTD VAT Return is due.
If you don’t pay by direct debit, you must sign-up at least three days before your VAT Return due date.
If you’re already registered for VAT, your business won’t be enrolled automatically for MTD.
HOW DO I REGISTER FOR MTD FOR VAT?
The registration process involves logging in with the Government Gateway account for your business. You might have used this previously when filing VAT Returns via the portal website. Once you are registered for MTD for VAT, you will probably need to activate the MTD functionality in the software.
IS MY CURRENT SOFTWARE COMPATIBLE?
Before you sign up to Making Tax Digital for VAT you’ll need either:
- a compatible software package that allows you to keep digital records and submit VAT Returns
- bridging software to connect non-compatible software (like spreadsheets) to HMRC systems
We can ensure that you have software that is compatible, and our team can provide the necessary training for your staff.
MORE QUESTIONS ON MTD VAT?