Making Tax Digital for VAT aims to make it easier and more efficient for businesses and individuals to record and declare tax to HMRC. Do you know that the way you submit your VAT returns for your VAT-registered company has changed? As per law, you are required to be a member of Making Tax Digital and you are required to utilize compatible software that supports MTD to keep VAT records and file VAT returns.
With deadlines for filing your VAT Return in the near future, You must be sure that you're meeting all regulations. Don't worry, we're here to assist you with the process of Making Tax Digital for VAT. First, take a look at what is Making Tax Digital:
What is Making Tax Digital for VAT?
If your company is VAT-registered you've likely heard regarding MTD and Making Tax Digital for VAT specifically. The law was introduced in April 2019 and it impacted all VAT-registered companies above the threshold for VAT (currently the threshold is PS85,000).
Now, MTD for VAT is available to all VAT-registered businesses. This includes businesses that are voluntarily registered for VAT and under the threshold. They need to keep their VAT accounting records in a digital format and make use of compatible software for the VAT calculation.
MTD for value-added tax (VAT) gives you the chance to completely transform your financial accounting into digital form and make use of the most recent technologies. In the same way, your total accounting admin workload is decreased.
What is the Best Time to Register for MTD for VAT?
The answer is "now". If not exempt from VAT, all VAT-registered businesses such as sole traders, limited companies, landlords, and LLPs have to sign up for MTD to be VAT-compliant from April 2022.
If you run or own an enterprise that isn't VAT-registered, you don't have to sign up until MTD for ITSA (Income Tax Self-Assessment) comes into effect from April 2024. MTD for corporate tax, however, will come into effect by April 2026.
The Requirements
If you're a VAT-registered company, you're required to register for MTD to make your VAT tax returns online with HMRC. It is also mandatory to keep electronic records of your business. Before you can submit your MTD registration, you must be using compatible software to help you submit your VAT return.
What Do You Have to Register for MTD for VAT?
To be able to register for MTD for Value-added tax (VAT), you'll have to gather some information:
● The email address that you use for your company
● Your latest VAT Return
● The Government Gateway ID
● Your National Insurance number if you're a sole trader
● The VAT number you have registered with
● Your company registration number and Unique Taxpayer Reference (UTR)
How to Register for MTD for VAT?
It is important to select the software you plan to utilize before registering for MTD for VAT. You can register for MTD for VAT by clicking here, then, you have to answer the questions. This involves providing the details previously mentioned.
There are limits regarding when you are able to sign up, to prevent you from making an additional payment on your current tax return. You should not sign up less than seven days before your VAT Return is due, or less than five days after your VAT Return is due. You should get an acknowledgement from HMRC within 3 days.
It is important to note that the Making Tax Digital for Value-added Tax is a feature in your accounting software that needs to be activated after you have your details for signing up, according to HMRC. So, activation will not be automated. Talk to your tax accountant in case you're not sure what's needed.
Some Quick Reminders
● Remember that once you've submitted your application, you must not submit the VAT returns to HMRC in the traditional way straight through Your accounting system.
● You must use HMRC's compatible software to keep track of your VAT.
● Only use compatible software to file your VAT returns in the future.
Last Thoughts About MTD for VAT
Once you've figured out how to register with the tax authorities for Making Tax Digital for VAT You can follow the steps necessary to register for your company. The help of software that manages your VAT accounting will allow you to transform your processes. Ask your tax accountant for advice on the requirements. They can assist you in examining the processes of your business to identify the areas that need to be changed.
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