From 1 April 2022 all vat registered businesses and individuals will need to comply with Making Tax Digital for VAT (MTD VAT).
Most businesses will be MTD compliant anyway as it was a requirement for those earning above the VAT threshold to be MTD compliant since April 2019. However, from 1 April 2022 those that were not submitting returns under MTD, if for example they were under the threshold and had voluntarily registered for vat, will now need to be MTD compliant.
MTD for VAT will apply to those making their first MTD returns starting on or after 01 April 2022. Meaning if your VAT is paid quarterly, then either quarter-ending June 2022, July 2022 or August 2022 will be your first return required under the digital MTD rules.
Getting ready for MTD for VAT
For those looking to set up MTD for VAT you will first need to decide on a software package to use. For example, some of the software commonly used by clients are Sage online, Sage 50, QuickBooks Online and Xero.
Once you have decided on the software to use you will need to sign up for MTD with HMRC and this can be done here:
Information you will need to sign up include:
- A business email address,
- Government Gateway user ID and password.
- Your VAT registration number and latest VAT return,
- Your National Insurance number if a sole trader
- Your company registration number and Unique Tax Payer Reference (UTR) if you’re a limited company.
Once you finish the registration process you will receive a confirmation email from HMRC within 3 days, this will allow you to enter the necessary details into your accounting software and allow you to submit your VAT returns electronically. If you do not receive this email you will need to contact HMRC.
It is best to sign up once your VAT return prior to the first return required under MTD has been successfully submitted and the liability, if any, has been fully paid. This ensures you have enough time to set up your systems for MTD and more importantly once you register for MTD, the old method of manually submitting your VAT return will no longer be available to you.
If you have any questions, or need any assistance with getting set up for MTD please do not hesitate to contact us.