Making Tax Digital (MTD) for VAT- 1st April 2022 deadline
There is no hiding from it, MTD for VAT becomes mandatory for all VAT registered businesses from April 2022, even if you are VAT registered but under the £85,00 VAT threshold. What does this mean for your business?
- You will need to sign your business up to Maxing Tax Digital (https://bit.ly/35ubffy)
- You will now be required to file your VAT returns directly from the accounting software you use to record your day-to-day transactions.
Accounting software can be specific software such as FreeAgent, QuickBooks, Sage or one of the other 549 compatible software providers listed on HMRC website (https://bit.ly/3HwfQve), or, if you use spreadsheets to calculate your VAT figures, you will need to use bridging software to report these figures to HMRC.
Records you must keep include:
- your business name, address, and VAT registration number
- any VAT accounting schemes you use
- copies of all invoices/credit notes you issue
- copies of all invoices/credit notes you received (originals or electronic copies)
- name, address, and VAT number of any self-billing suppliers
- import and export records
- records of any items you cannot reclaim VAT on – e.g., business entertainment
- records of all zero-rated items, reduced or VAT exempt items you buy or sell
- a VAT account
- any adjustments you make to a return
If you are not already using software, now is a great time to check into this. Accounting software would be a positive move forward as you have the ability to download bank transaction into the software and attach your documents to the transactions in your software, this means everything is stored in one place. The software will then calculate your VAT and link direct to HMRC to file the return.
If you bank with NatWest, RBS or Mettle business banking, you can use FreeAgent software for free.
Please remember your account transactions are only as accurate as the information entered and the knowledge or the person recording the transactions. If you are unsure of what is required to comply with MTD or require assistance with choosing software, please get in touch and book a discovery call.
Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)