VAT-registered businesses must register for MTD for VAT by 1 April 2022
In July 2020, it was announced that all VAT-registered businesses must file digitally through Making Tax Digital (MTD) from April 2022, regardless of turnover.
HMRC urges VAT-registered businesses to sign up for Making Tax Digital for VAT before 1 April 2022.
MTD means that certain persons must not only submit VAT returns digitally using MTD-compatible software, but also must keep records in a digital format, which enables information to be provided to HMRC directly from the accounting system, or via bridging software, through application programme interfaces (APIs), which can also receive information from HMRC.
MTD aims to tackle that part of the tax gap caused by error and failure to take reasonable care, by removing opportunities to make certain types of mistakes in preparing and submitting tax returns.
The following records must be kept digitally:
You also need to keep digital copies of documents that cover multiple transactions made on behalf of your business by:
You must add all your transactions to your digital records, but you do not need to scan paper records like invoices or receipts.
The business will need to use a compatible software package or other software that connects to HMRC systems.
If you use more than one software package to keep records and submit returns, you need to link them.
Some ways you can link your software include:
Businesses can find help and support on how to sign up for Making Tax Digital. Agents can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. Those who do not join may be charged a penalty for failure to do so.
HMRC is running a series of webinars for businesses that need help and support on signing up for Making Tax Digital. More information can be found on HMRC’s Making Tax Digital help page.