21st January 2022 Posted by - Alexander Accountancy
Making Tax Digital (MTD) for VAT is to be extended to cover businesses with a turnover below the VAT threshold from April 2022. The MTD for VAT regime started in April 2019 when businesses with a turnover above the VAT threshold of £85,000 became mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software.
The extension of MTD from April 2022 will apply to all VAT registered businesses with turnover below the VAT threshold of £85,000. This change was first announced in July 2020 and about a third of businesses mandated to sign-up from April 2022 have already voluntarily chosen to use MTD.
If you are affected and have not yet signed up, we would urge you to start the process as soon as possible.
To sign up to MTD for VAT, businesses, or their agent need to:
- Visit GOV.UK and choose Making Tax Digital-compatible software.
- For many businesses, the software they are using should already be compatible with MTD.
- Keep digital records starting from 1 April 2022 or the beginning of their VAT period
- Sign up and submit their VAT Return through Making Tax Digital
A small number of VAT-registered businesses may be eligible for an exemption from MTD, if it is not reasonable or practicable for them to use digital tools for their tax. If a business has previously been granted an exemption for VAT online filing, this will carry over to MTD VAT requirements.
Source: HM Revenue & Customs Jan 2022