Making Tax Digital for VAT is mandatory for ALL VAT-registered businesses and has been since the 1st of April 2022. Even those under the VAT threshold (currently £85,000) must now comply.
This means that all VAT-registered businesses are now required to:
- keep digital VAT records, and;
- send VAT returns using MTD-compatible software.
Regardless of turnover.
The deadlines for sending VAT returns and making payments haven’t changed but businesses need to use software to keep their accounting records digitally. This can include dedicated record-keeping software such as Quickbooks or Xero or a combination of software packages and/or spreadsheets.
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.
The 30th June 2022 represents the end of the 1st full VAT quarter since all VAT registered business were required to sign up to Making Tax Digital.
How do I sign up to Making Tax Digital for VAT?
To sign up to Making Tax Digital VAT, businesses, or an agent on a businesses’ behalf, need to:
- Choose Making Tax Digital-compatible software
- keep digital records starting from 1 April 2022 or the beginning of their VAT period
- sign up and submit their VAT Return through Making Tax Digital
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 Making Tax Digital VAT requirements. Information on how to apply for an exemption is available on GOV.UK.
Businesses, or an agent on their behalf, must sign up to Making Tax Digital for VAT via GOV.UK to fully join Making Tax Digital. They must have Making Tax Digital-compatible software before signing up.
Businesses need to have signed up to Making Tax Digital for their first VAT return starting on or after 1 April 2022 but may not be required to make their first submission via Making Tax Digital until Summer 2022.