Did you know that the method by which you prepare your VAT returns for your VAT-registered company has changed? In law, you have to join Making Tax Digital (MTD) and must make use of the MTD compatible program to maintain VAT records and file VAT returns. With the deadline for filing VAT Returns coming up it is imperative to be sure that you’re meeting all the requirements. In the end, you aren’t going to be slapped with a penalty for not adhering to the law, do you? Don’t worry, we’re here to assist you with making Tax Digital for VAT. However, first take a look at the basics of Making Tax Digital:
What is the purpose behind making Tax Digital for VAT?
If your company is VAT-registered, then you’ve likely heard about Making Tax Digital (MTD) and MTD specifically for VAT. In April of 2019, it affected all VAT registered businesses that exceed the threshold for VAT (currently at PS85,000). However, as of now, MTD for VAT is applicable to all VAT-registered companies. This includes companies that are voluntarily registered for VAT and are not over the threshold. They should save their VAT accounting documents electronically and make use of compatible software for the VAT calculation. MTD for VAT gives you the chance to completely transform your financial accounting. If you switch to a new software or upgrade your current software to ensure it is compatible, you will be able to modernize your software and make use of the most modern technology.
What is the best time to register for MTD to register for VAT?
The first question is how fast do you need to put the skates in? The answer is pretty fast. If not exempt by law, all VAT registered companies that include sole traders limited companies, partnerships landlords, LLPs, and landlords are required to join MTD to be VAT-compliant from April 2022. This applies regardless of amounts of turnover. If you are the owner or manager of an enterprise that isn’t VAT-registered, you don’t need to join as of when the MTD of ITSA becomes effective beginning in April 2024. MTD for corporate tax, however, will come into effect by April 2026.
The demands
If you’re a VAT-registered firm, you’re required to join MTD so that you can submit your VAT returns online using HMRCsoftware that is compatible (such such as ANNA). It is also mandatory to keep the business’s records digitally. Before you can submit your MTD registration, you must have a suitable software program that can help you submit your VAT return.
How to sign up for VAT accounts and file an online VAT Return
If the tax-deductible turnover of your business falls below the VAT threshold , and you’ve not yet registered your business voluntarily for VAT, it’s the best time to register. The registration process allows you to claim VAT on items you buy for your company. A lot of businesses sign up voluntarily as it makes their business seem more professional, particularly when they sell to other businesses. The purpose for making Tax Digital in VAT’s case is to make VAT easier accounting. If you’ve been stymied previously because of the administrative demands for VAT tax accounting this is an excellent chance.
What are the steps to take to register to get MTD to be VAT compliant?
To be able to register for MTD to register for VAT, you’ll have to gather some of the following information:
- The email address you use to communicate with your company
- This is the Government Gateway ID you use to conduct business
- You have a VAT Registration number
- Your latest VAT Return
- The number you use for your National Insurance number if you’re sole trader
- The registration number of your company and Unique Taxpayer Reference (UTR) when you register a limited-company.
My accountant registered for MTD to calculate VAT on my behalf?
Yes. Simply ask them to do this on behalf of you. Be aware it doesn’t mean that you are able to avoid MTD to meet VAT’s requirements. It is still necessary to keep the essential VAT accounting documents in a digital format and utilize software for your VAT accounting; however, your accounting professional calculates the VAT amount and then submits the VAT Tax Return on behalf of you. Your accountant might request that you connect your accounting software to theirs.
Last thoughts about MTD for VAT
Once you’ve figured out how to apply with the tax authorities for Making Tax Digital for VAT You can follow the steps necessary to register for your company. By using software for managing your VAT accounting will allow you to transform your processes. Need help in navigating MTD in VAT? Talk to your accountant about the requirements . They can assist you in examining the processes of your company to determine the things that require to be modified.
