You may have received several emails and letters from HMRC lately, regarding Making Tax Digital for VAT, but what do these actually mean & do you need to do anything? If you haven’t yet received a letter, that’s not to say you won’t!
Making Tax Digital is one of the biggest changes coming to businesses, and it brings with it lots of benefits. Not only will business admin errors be reduced, but productivity will improve for your business too. Less time will need to be spent on admin, and according to Sage an average of 27.6 days per year will be saved by businesses (adding up to savings of £17,000 annually!)
Why have I received a letter & what do I do?
If your business has received a MTD for VAT letter from the HMRC, this means you need to start keeping digital records and submit your VAT returns online too rather than manually. The letters themselves contain all the information regarding the steps you need to take, so read them carefully. Here is a general overview for you:
- You need MTD-compatible software or bridging software
- You must use your software to keep digital records
- You should go to the gov.uk website so you can sign up for MTD for VAT
- You have to allow your software to work with MTD, then you can start submitting your VAT returns digitally
Making Tax Digital is exactly as it sounds, since 1st April 2022, all VAT-registered businesses are required to keep their business records digitally, and submit VAT data via MTD-compatible software (such as Sage). It is worth noting that if you don’t start using MTD before your first MTD for VAT return deadline (which will be outlined in your letter), then you may receive a penalty.
Key dates to be aware of
The key dates specific to your business depend entirely upon when your first full VAT period starts after the 1st April 2022. Most businesses have a standard quarterly VAT accounting period, which means that you will need to submit your VAT return through MTD as of the following start dates:
- 1st April 2022 – if the previous VAT quarter ended on 31st March 2022
- 1st May 2022 – if the previous VAT quarter ended on 30th April 2022
- 1st June 2022 – if the previous VAT quarter ended on 31st May 2022
Getting help with MTD
Although this whole process of making tax digital for VAT does sound confusing, once set up it will save you both time and stress within your business. The letter from HMRC will point you in the direction of a few helpful resources, and details on how to digitally record your accounts. Sage themselves (who are a supplier of MTD compatible software), have put together a handy guide called the MTD hub which has lots of FAQs and useful information within it.
If you have any questions or would like to know more about the MTD-compatible software options that Sage have, then contact our expert Sage team today on 01482 828000.
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