The UK Government have recently set out their 10-year plan to modernise tax and the extension of Making Tax Digital is a fundamental part of it.
The 10-year strategy is part of the government’s ambition to make progress and lay foundations for further reforms between now and 2030. They believe that now is the right time to plan the extension of Making Tax Digital for VAT.
To keep you updated I’ve summarised here what is happening with regards the extension of Making Tax Digital for VAT.
Since 2019, all VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been required to keep their VAT business records digitally and send their VAT returns using MTD-compatible software.
The Making Tax Digital for VAT extension will change things from April 2022. As of that date all VAT-registered businesses will be required to:
- keep digital VAT records, and;
- send returns using MTD-compatible software.
The deadlines for sending VAT returns and making payments have not changed.
Businesses need to use software to keep their business records digitally. This may include dedicated record-keeping software or a combination of software packages or spreadsheets.
Since 1 April 2019, software that prepares a VAT return to send to HMRC must be MTD-compatible for those mandated to use MTD. Data must also be exchanged digitally between all software used by a business for VAT.
The information contained with the MTD VAT return is generated by pulling information from the digital records and is the 9 boxes required for the VAT return.
In the case of spreadsheets, this means that the software must be capable of taking the relevant information from the spreadsheet electronically and sending it to HMRC.
Help and support
If you need help with the Making Tax Digital extension or any other aspect of your Making Tax Digital contact me now.