13th April 2022
What is Making Tax Digital?
Making Tax Digital (MTD) is an initiative which has been put in place by the government and HMRC to modernise submitting VAT returns and make them easier for businesses and people to keep track of.
From 1st April 2022, all VAT-registered business, regardless of turnover will be required to store all their records digitally and to submit their VAT returns to HMRC via MTD-compatible software. This means that any invoices, bills or receipts that relate to the business will need to be uploaded to MTD compatible software and these records will then be used when it comes to submitting a VAT return online.
HMRC states that MTD is going to make it easier for business to “get their tax right” and will make VAT returns more accurate by having software that can assist in VAT returns and making sure the right VAT is being submitted.
All VAT-registered businesses must follow the rules of ‘MTD for VAT’ unless your business uses the VAT GIANT service, for example you’re a government department or and NHS trust, or your business is eligible for exemption.
When does this start?
Since 2019, VAT-registered businesses with a taxable turnover above the VAT registration threshold (currently £85,000) have needed to follow MTD regulations and submit their VAT returns digitally.
From 1st April 2022 a new phase of MTD has been introduced – MTD for VAT will apply to all VAT-registered business regardless of their turnover.
If you or your business are below the VAT threshold but have voluntarily chosen to be VAT registered, you will be required to submit your VAT through MTD-compatible software.
The changes will be required for the company’s first VAT return period starting on or after 1st April 2022.
For example; if you file VAT returns quarterly and the VAT quarter ends on 31st May 2022, the first VAT return you’ll need to file through MTD will be for the quarter ending 31st August 2022.
If you would like further advice, please contact us on 01903 300230, or email info@thlacccountancy.co.uk.