Make your business compliant with the Making Tax Digital For VAT regulations. This new system will help you keep your business’s records digitally, and submit your VAT returns directly to HMRC. To do this, you will need an online accounting system that is compatible with Making Tax Digital, and its digital links allow you to transfer data between your software and HMRC. Sage, Xero and QuickBooks are three examples of software that are compatible with the Making Tax Digital For VAT requirements.
In addition to making the process more efficient, Making Tax Digital also makes it easier for businesses and individuals to pay their taxes. To make your business compliant, you need to use software that can submit VAT returns. There is a guide from HM Revenue and Customs. The guide includes step-by-step instructions for agents and businesses. You can use it to make a successful transition from manual filing to electronic filing. If you have questions about Making Tax Digital for VAT, check out the frequently asked questions further down.
The Making Tax Digital regulations require that all VAT registered businesses keep certain records. They are called ‘electronic accounts’ in the Making Tax Digital regulations. Depending on the software you use, the exact process for entering this information will differ. Software providers can offer advice and support on how to enter data into the system. However, if you don’t have any specific software, you can use an online spreadsheet for keeping VAT records. However, if you use a spreadsheet, you still need a software that can provide a link between your spread sheet data and HMRC system.
The software should include information about the VAT rate and time of supply. You should also include information about your business, including the name of your business, the principal place of business, and VAT registration number. You can also include details of your VAT accounting scheme. Ultimately, you should be able to keep accurate records of your business transactions using this system. The Making Tax Digital For VAT software is the key to digitally storing your business’s information.
Businesses must be compulsorily registered in order to make the changes. They should start filing their VAT returns under the Making Tax Digital for VAT scheme, if they are not already doing so from 1 April 2022. Failing to do so could result in hefty penalties. If you are not exempt from the Making Tax Digital For VAT scheme, you should join it now to ensure your business’s compliance.
Exemptions from Making Tax Digital for VAT
Although most businesses will not be able to opt out of the Making Tax Digital (MTD) system, they will have to implement the scheme as a part of their accounting process to remain compliant with the rules. However, certain groups of people may be exempt from the scheme, such as businesses undergoing insolvency procedures, disabled individuals, people living in remote areas or businesses without access to a computer. If you think you are exempt, contact HMRC to learn more about your options.
The Government has published guidance on which businesses may be exempt from the Making Tax Digital for VAT rules. This guidance highlights who might be eligible for exemption. This guidance is included in the Making Tax Digital for VAT Notice and forms part of section 3. While no business is mandated to register for MTD for VAT, businesses whose taxable turnover does not exceed the VAT registration threshold are not required to comply with the rules.
Signing up to MTD
Before MTD for VAT was introduced, many businesses used a variety of record keeping systems to make preparing their annual VAT return a snap. Despite the complexity of this new system, many businesses figured that they would have to switch to it at some point. In addition, many assumed that they would be over the VAT threshold at some point in the future. That’s where Making Tax Digital came into play.
While many accounting software packages are designed to help businesses comply with MTD, not all of them do. The biggest change to businesses will be the requirement to use software that is compatible with the new rules. Software packages designed for businesses that will work with Making Tax Digital (MTD) will meet this requirement. Those that do not yet use accounting software should seek advice from an accountant before making the switch. This new requirement will affect all VAT accounting schemes, including those that use spreadsheets or paper-based records.