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Making tax digital (MTD) – For VAT

Making Tax Digital for VAT became mandatory for all VAT registered businesses from 1 April 2022 regardless of their turnover. This requires businesses to keep digital VAT records, and submit VAT returns using compliant software. Failure to do so could result in penalties.

  • Check the Deadlines for Your Business

    You must start keeping digital records from the first full VAT period that starts after 1 April 2022.

    To avoid overlap with the existing system, your must sign up for MTD for VAT either 7 days before your first return is due or 5 days after your first return is due.

    Your first quarterly return must be submitted by 1 month and 7 days after the end of the VAT quarter

  • Choose MTD-Compliant Software

    You need to already be using MTD-compliant accounting software in order to register for MTD for VAT. Ask your software supplier or check the HMRC website if you are unsure.

  • Ask Your Accountant

    Your accountant is your best resource when it comes to MTD for VAT. They’ll be familiar with the process and will be able to give you tailored advice on how to prepare and make MTD for VAT work for you.

  • Educate Your Team About MTD for VAT

    MTD for VAT affects all your accounting processes and any staff involved in those processes. From purchasing to sales and finance, make sure everyone in your organisation is ready to adapt.

  • Prepare for the Next Phases of MTD

    MTD for VAT is just the start of HMRC’s plan to digitise the tax system.

    From April 2024, sole traders and landlords with income over £10,000 per year will have to comply with MTD for Income Tax. From 2025, it will also apply to partnerships. Then, in April 2026, MTD for Corporation Tax will be introduced.

    Those dates may seem a long way off, but the more work you do now to prepare your processes, the easier it will be to adapt to MTD for Income and Corporation tax when they eventually arrive.

  • Check Whether Your Business Has to Comply or Not

    HMRC will consider exceptional circumstances as a valid reason for exemption from MTD for VAT, such as inability to use a computer or go online due to a disability or religion, or living somewhere so remote that there’s no internet connection. If you think you fall into this category, you will need to call the HMRC helpline and make your case for exemption to customer support. They will consider your personal circumstances and make a decision based on the facts.