01278 228004

Chamber News

You are here: 

Making Tax Digital for VAT is coming – are you ready?

Friday 7th January, 2022

Businesses are reminded to take steps to prepare for Making Tax Digital (MTD) for Value Added Tax (VAT) before it becomes mandatory for all VAT-registered businesses from 1 April this year. 

MTD is designed to help businesses eliminate common errors and save time managing their tax affairs.

MTD for VAT is part of the overall digitalisation of UK Tax. In a recent independent study of over 2,000 businesses, 69% reported experiencing at least one benefit from MTD. These included preparing and submitting returns faster and increased confidence that they were getting tax right. Sixty-seven percent of businesses also felt MTD had reduced the potential for mistakes in at least one aspect of the record keeping, preparing and submitting returns process.

As of December 2021, nearly 1.6 million taxpayers had joined MTD for VAT with more than 11 million returns successfully submitted. Around a third of VAT-registered businesses with taxable turnover below £85,000 have voluntarily signed up to MTD for VAT ahead of April 2022, and thousands more are signing up each week.

Since April 2019, businesses with a taxable turnover above £85,000 have already been required to follow MTD, keeping digital records and filing VAT returns using MTD compatible software. 

In July 2020 it was announced that all VAT registered businesses must file digitally through MTD from April 2022, regardless of turnover. HMRC is now reminding businesses below the £85,000 threshold of the steps which they need to take to be ready.

To sign up to MTD VAT, businesses, or an agent on a businesses’ behalf, need to:
Step 1: Visit GOV.UK and choose MTD-compatible software
Step 2: Keep digital records starting from 1 April 2022 or the beginning of their VAT period
Step 3: Sign up and submit their VAT Return through MTD.

If businesses have not yet signed up to MTD for VAT, they should do so now to ensure they are ready in time for the April 2022 deadline.

Joanna Rowland, Director General for Transformation Group in HMRC, said:

“MTD is fundamental to the delivery of a trusted and modern tax system, making it easier for businesses to get their tax right and supporting the UK to go digital.

“By signing up for MTD, we expect most businesses to experience long-term benefits, including reduced errors and time saved in managing their tax affairs.

“We encourage businesses to explore digital record-keeping for their VAT affairs and use this time to choose the right software to support their business needs.”

FSB National Chair, Mike Cherry, said:

“We have worked hard to ensure Making Tax Digital launch dates were adjusted to give small businesses more time to prepare and allow more competition to open up in the accounting software market. It’s important that firms do all they can to get ahead of deadlines and access the affordable platforms that are now available; if they are members of FSB, they will have access to a new easy MTD member service that we are creating. 

“We’ll continue to work with government, and through our support services, to minimise the admin and cost impacts of MTD on small firms whilst unlocking the productivity gains the initiative could bring.”    

Businesses can find help and support on how to sign up for MTD on GOV.UK. 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.

For businesses who need help and support on signing up for MTD, HMRC is running a series of webinars. More information can be found on HMRC’s MTD help page.

We recognise that some businesses will experience upfront costs in joining MTD. There are a range of compatible software products available for MTD 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 low-cost options, can be found here.

Some VAT-registered businesses may be eligible for an exemption from MTD, 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 how to apply for an exemption.

Example case studies from businesses who are currently benefitting from MTD for VAT can be viewed here.

Latest news

Next step for Bridgwater Tidal Barrier
January 20, 2022

The £100m Bridgwater Tidal Barrier - designed to protect some 13,000 homes and businesses from tidal flooding - is one step nearer.  The Secretary of State for Environment, Food and Rural Affairs (Defra), George Eustice, approved the Transport and Works Act Order (TWAO), which was submitted in December 2019 and grants powers to construct and…

Read More
Congratulations to the Finalists in the Bristol, Bath and Somerset Tourism Awards 2021/22
January 17, 2022

The Finalists have been announced today for the 2021/22 Bristol, Bath and Somerset Tourism Awards.  They will now have to wait until the online Awards Day on 17 February to learn whether they have won Gold, Silver, Bronze or a Special award.  A further two businesses received Commended status. The 6th year of the competition…

Read More
HMRC reminds Businesses to Declare COVID-19 Grants on Tax Returns
January 13, 2022

HM Revenue and Customs (HMRC) is urging tax agents and accountants to remind their clients that COVID-19 support grants or payments are taxable and should be declared on their company tax returns. The deadline for customers or agents filing company tax returns (CT600) is 12 months after the end of the accounting period it covers.…

Read More
Covid Recovery Grants - Update from Sedgemoor District Council
January 11, 2022

Guidance has now been issued to Local Authorities with reference to the new grant scheme announced by the Government on the 21st December 2021. Sedgemoor are now analysing and processing  the guidance and will shortly be launching an application process for businesses who met the criteria to apply for a grant payment. This scheme will…

Read More