Making Tax Digital for VAT becomes mandatory in less than one week

HMRC is warning VAT-registered businesses that Making Tax Digital (MTD) for VAT becomes mandatory from 1st April.

Businesses have less than one week left to ensure they are using compatible software to submit VAT returns, when online submissions become mandatory. Making Tax Digital is part of the HMRC’s ambitions to digitalise the tax regime, with rollout set to reduce errors and save businesses time in processing returns.

So far, around a third of VAT-registered businesses are already signed up ahead voluntarily, with 11 million returns successfully submitted. VAT-registered businesses that have not yet signed up to Making Tax Digital for VAT should do so now. All VAT-registered businesses must use Making Tax Digital for VAT for their first VAT return starting on or after 1 April 2022.

HMRC are advising businesses use the remaining time to choose the Making Tax Digital compatible software that is right for their VAT returns, with simple free options available as well as more advanced products for businesses with more complex tax affairs.

Lucy Frazer, HM Treasury’s Financial Secretary to the Treasury, said

“Businesses using MTD are saving time on their tax affairs, streamlining their processes and boosting their productivity as a result.

“Our first move towards a modern, digital tax service – MTD makes it easier for businesses to get their tax right first time.”

There is a range of support and information available for those that need it – including accessible online content such as YouTube videos, GOV.UK help pages and HMRC’s Extra Support service.

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.

There are a range of compatible software products available for Making Tax Digital for VAT, allowing businesses to choose which tools they use to run their business and tax affairs. A list of software compatible with MTD for VAT, including free and low-cost options, can be found on GOV.UK.

HMRC understands that some businesses will find it easier to comply with Making Tax Digital than others. For those who need more help and support on signing up for MTD, HMRC is running a series of webinars.

Some VAT-registered businesses may be eligible for an exemption from Making Tax Digital, 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. Go to GOV.UK for more information on whether an exemption may apply.

https://youtu.be/EVC_UuErOB0