LSCA Business
Expansion of Making Tax Digital for VAT from April HMRC has announced that businesses should prepare for changes to reporting under Making Tax Digital (MTD) for VAT as it is becoming mandatory for all VAT-registered businesses from 1 April this year. All VAT registered businesses must file digitally through MTD, from this date. This will affect smaller businesses as previously only VATregistered companies with income over £85,000 had to file their VAT returns through MTD. However, this is now being extended to companies who’s incomes are below the threshold. Companies need to have signed up to MTD for their first VAT return starting on or after 1 April 2022 with at least five days after their last non-MTD VAT return deadline date, and at least seven days before the first MTD VAT return deadline date or the company may have to pay VAT twice. However, they may not be required to make their first submission via MTD until summer 2022. Organisations that do not sign up will be charged a penalty.
£2,700 for rateable value up to £15,000
£4,000 for rateable value up to £15,000
£6,000 for rateable value above £51,000
With these rules in place, it will be mandatory to keep digital records under MTD. Doing this will reduce the likelihood f errors and the time spent on tax administration. MTD for VAT is part of the overall digitalisation of UK tax. Businesses with a taxable turnover above £85,000 have already been required to follow MTD from April 2019, keeping digital records and filing VAT returns using MTD compatible software. The steps to sign up to MTD VAT, businesses, or an agent on a businesses’ behalf, are: 1: Visit gov.uk and choose MTD-compatible software 2: Keep digital records starting from 1 April 2022 or the beginning of their VAT period 3: Sign up and submit their VAT return through MTD. It is possible that some VAT-registered businesses may be eligible for an exemption from MTD, if it is not reasonable or practicable for them to use digital tools for their tax. If a business has previously been granted an exemption for VAT online filing, this will carry over to MTD VAT requirements. HMRC provides clear guidance and information that is easily accessible about the exemption process. MTD for Income Tax Self-Assessment (ITSA) will be introduced a year later and will now come into effect in the tax year beginning in April 2024, giving businesses that fit this criteria more time to prepare.
www.charteredone.co.uk
ISSUE 32 Spring 2022
31
