Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. You can upload and update your tax account in real time. This should make the whole process simpler and more accessible to all. You could even do your taxes whilst reading one of our pages!
If you own a business and/or you are self-employed and you pay income tax, national insurance, VAT or corporation tax, then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD compatible software, and to update HMRC at least quarterly via your digital tax account. Eventually this will abolish the annual tax return. There will be penalties for non- compliance.
MTD for VAT has already started and has been “live” for nearly two years. It started with businesses above the VAT threshold limits (currently £85,000) in April 2022.
From the 1 April 2022, MTD for VAT applies to all VAT registered businesses regardless of turnover.
We can help you prepare for the new rules to make the transition as smooth as possible. We can recommend the right software for your business and provide the training and support you need. We understand that for any business, particularly established businesses the whole concept of changing the way tax is dealt with can seem daunting. This is a massive step in the right direction however as it should make the whole process a lot simpler and therefore mean less chance of errors. Our teams are well versed in all accounting and tax issues, with extensive knowledge and experience in all areas, our teams are more than capable of making this transition relatively simple.
As chartered accountants we have an in-depth knowledge of your overall business needs. Working with our specialist tax and payroll colleagues we can suggest improvements that work for you and your business. We have over 35 years’ experience and skilled staff who will work with you to ensure all your needs are met. Every business is unique, and every business requires something different, by outsourcing your payroll to us we can adapt our template to provide individual plans for any size business.
From the 1 April 2022, Making Tax Digital for VAT applies to all VAT registered businesses regardless of the level of turnover. The first VAT period to which MTD applies to all VAT registered businesses (who are not already doing so) will be the one commencing on or after 1 April 2022.
Take a look at what our clients have to say about our VFO service here.
If you want to free up time and money to put back into your business, contact us here to discuss our package options.
This notice explains the rules for Making Tax Digital for VAT and about the digital information you must keep if they apply to you. It was last updated 31 December 2020.
Rules introduced under the Making Tax Digital (MTD) initiative mean VAT registered businesses with taxable turnover above the VAT registration threshold need to keep digital records and submit VAT Returns to HMRC using compatible software. From 1 April 2022 this will apply to all VAT registered businesses.
Below are useful references to guidance provided by the Government, these are updated frequently however should you need further advice on any particular issue do not hesitate to get in touch with the team here…
VAT record keeping
VAT registered businesses with a taxable turnover of more than £85,000 must follow the rules for ‘Making Tax Digital for VAT’ by keeping some records digitally, unless:
You can choose to sign up to Making Tax Digital for VAT if your business earns less than £85,000.
From 1 April 2022 all VAT registered businesses must sign up, whatever they earn.
Records you must keep digitally
You need to keep the following records digitally:
How to keep digital records
You need to use a compatible software package or other software (like spreadsheets) that connect to HMRC systems. These can cross over and must be kept up to date to ensure no errors or delays.
Making Tax Digital for VAT as a business: step by step
Follow these steps if you’re a business or sole trader and you need to follow the rules for Making Tax Digital for VAT.
Find software that’s compatible with Making Tax Digital for VAT
Before you sign up to Making Tax Digital for VAT you will need either:
Check if you can apply for an exemption or opt out from Making Tax Digital for VAT
You are automatically exempt from Making Tax Digital for VAT and do not need to apply if:
Apply for an exemption
You can apply if it’s not reasonable or practical for you to use computers, software or the internet to follow the rules for Making Tax Digital for VAT.
This could be because:
To find out about the current state of play, read Ian Jarvis’ blog here….
If you need more help regarding MTD and how it will affect your business, contact us here….
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