18 Mar Making Tax Digital: Don’t miss the Deadline
VAT-registered companies, it’s time to leave your spreadsheets and paper records behind.
On the 1st of April 2022, all VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax Digital (MTD) rules for their first return starting on or after April 2022.
At present, only companies with a taxable turnover above the VAT threshold of £85,000 are required to follow the MTD rules by keeping digital records and using software to submit their VAT returns.
This change will mean that MTD rules will apply to all VAT-registered businesses from the 1st of April 2022.
The changes to the MTD rules will apply to the first full VAT quarter after the 1st of April 2022. For example, if your VAT quarter is ending in May, then MTD needs to be complied with for the quarter from June to August.
As part of Making Tax Digital, you will be required to use desktop accounting or cloud accounting software to submit your VAT returns digitally. This means that submissions to HMRC via the Government Gateway portal will no longer be valid, and HMRC will only accept VAT returns made using software that supports MTD for VAT.
Finding a Making Tax Digital software that suits your business’s needs is essential. Our tax experts can advise you on the most appropriate cloud accounting or desktop accounting software for your business.
It is important to note that enrolment for Making Tax Digital is not automatic, even if your business is VAT registered. So if your company hasn’t yet signed up, it is important to do so now to ensure that you are ready for the April 2022 deadline.
To sign up to MTD VAT, businesses need to:
Visit GOV.UK and choose Making Tax Digital-compatible software or speak to your accountant at Douglas Home and Co, who will be able to advise on the most appropriate software for your business.
Keep digital records starting from the 1st of April 2022 or the beginning of their VAT period.
Sign up and submit their VAT Return through Making Tax Digital.
As part of the digitisation of UK Tax, there will be further changes to Making Tax Digital requirements over the coming years.
As part of the Making Tax Digital initiative introduced by HMRC, you may be required to leave behind your spreadsheets or paper records and move to digital systems such as cloud accounting software.
· From April 2024, Making Tax Digital for Income Tax applies to self-employed businesses and landlords with annual business or property income above £10,000.
· From April 2026, Making Tax Digital for Corporation Tax may come into effect.
If you have any queries about complying with the new Making Tax Digital rules, please contact Douglas Home & Co’s team of tax experts by emailing mail@dhco.co.uk.