Let’s get straight to the point: if you are registered for VAT in the UK, from 01st April 2022 you need to keep digital VAT records and submit your returns via third party software.
Businesses that were below the VAT registration threshold of £85,000 have not been required to meet the requirements for digital record keeping for VAT in the UK. However, from 01st April 2022, ALL UK VAT registered businesses will have to be prepared to demonstrate that they are meeting HMRC’s digital record keeping guidelines and will have to submit their VAT returns via MTD-compatible software.
These changes are likely to affect over 1 million UK VAT registered businesses that have not, up to now, been required to follow MTD rules.
What is Making Tax Digital (MTD)?
The short version is that Making Tax Digital (MTD) has been HMRC’s initiative to streamline their tax service, primarily to reduce errors in VAT compliance and the burden imposed on HMRC in detecting, communicating, and resolving said errors. What it has meant for UK VAT registered businesses is that they need to keep their UK VAT records digitally and submit their VAT returns via HMRC approved, third party ‘bridging software’ capable of communicating with HMRC’s systems. The alternative is to submit via an extension to your business ERP or accounting software.
Is Making Tax Digital a mandatory item?
As we highlighted in our previous MTD publication it becomes mandatory from the first VAT return period starting on or after 01st April 2022 for all UK VAT registered businesses. There are certain exemptions from MTD, but you will have to qualify for exemption and submit a formal request to HMRC.
What do I need to do about Making Tax Digital?
PREPARE! There is no time like the present and if this change will affect you, you need to:
- Consider the impact MTD will have on your business going forward
- Understand what is required of you in terms of keeping digital records
- Be ready to file your VAT returns via software from April 2022
How can Ayming help?
Ayming can offer guidance on the more specific aspects of digital record keeping, ensuring that your business is meeting HMRC’s requirements for MTD. We can act as a submitting agent since we already have the necessary bridging software in order to file returns on your behalf and can even offer compliance checks on your VAT data, if required.
Whatever your circumstances, Ayming can help you find the right solution to meet your MTD compliance needs.