From 1 April 2022, MTD for VAT will apply to all VAT registered businesses regardless of the level of turnover.
From 1 April 2022, MTD for VAT will apply 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.
What is “Making Tax Digital”?
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.
Will it affect me?
If you own a business, 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. This will be the law and there will be penalties for non-compliance.
When is all this happening?
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 2019.
From 1 April 2022, MTD for VAT will apply to all VAT registered businesses regardless of level of turnover.
VAT notice 700/22 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.
What should I do about MTD?
Talk to us - the good news is that you can reduce your running costs and streamline your accounting by complying with the new rules!
In the last two years we have worked with many other clients to help them comply with MTD and streamline the way they do things.
Just suppose you had a system where your bank feeds your data directly into your accounts on a DAILY basis, you take a photo on your phone of a purchase invoice and it is posted automatically, you can see your results, who owes you money, who you owe and your business bank balance 24/7, 365 from your smart phone.
- A clear picture of your current financial position, in real-time
- Automatic updates that mean you can spend more time doing what you enjoy
- Your accounts are 100% online, so there’s no software to install and everything is backed up automatically. Updates are free and instantly available
Contact us to discuss your requirements in this area.