Are you ready for MTD? 1st November 2022 Deadline is approaching
Time is fast running out for VAT-registered businesses to be ready for Making Tax Digital filing.
From 1st November 2022, organisations will no longer be able to submit VAT returns through their existing online account.
By law, all VAT-registered businesses must sign up to Making Tax Digital (MTD) and use compatible software to keep their VAT records and file their returns.
Richard Fuller MP, Economic Secretary to the Treasury, said: “Making Tax Digital can help businesses get their tax right first time, which cuts the administration burden and frees up time for them to get on with what matters most to them – growing their business.
“I encourage any VAT-registered businesses still to register for Making Tax Digital to get online and sign up.”
MTD’s aim is to help businesses reduce errors in their returns, making it easier for them to manage their tax affairs, and consequently helping them to grow.
More than 1.8 million businesses are already benefitting from the service, and more than 19 million returns have been successfully submitted through MTD-compatible software so far.
In less than one month, businesses who file their VAT returns on a quarterly and monthly basis will no longer be able to submit them using their existing VAT online account, unless HMRC has agreed they are exempt from MTD.
If businesses do not file their VAT returns through MTD-compatible software, they may have to pay a penalty. Even if a business currently keeps digital records, they must check their software is MTD compatible and sign up for MTD before filing their next return.
If a business has not already signed up to MTD or started using compatible software, they must follow these steps now:
- choose MTD-compatible software – Here at Byte we recommend Xero accounting software but a range of software, including free and low-cost options, can be found on GOV.UK
- check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’.
- keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK.
- sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.UK and search ‘record VAT’.
If your business is already exempt from filing VAT returns online, or if their business is subject to an insolvency procedure, they will automatically be exempt.
For any new businesses not yet registered for VAT, they will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS).
If you are unsure what to do, get in touch with one of our Team who will be happy to help. A range of accessible help is also available online through GOV.UK, webinars and videos as well as through HMRC’s Extra Support Service.