What the HMRC Making Tax Digital for VAT letters mean for your business

Magenet Magenet


Have you acquired a letter from HMRC about Creating Tax Electronic for VAT? If you have, you’re not by itself.

HMRC is sending a sequence of Making Tax Electronic (MTD) for VAT letters to qualified VAT-registered corporations.

This is to permit them know that the way VAT records are kept and VAT Returns are submitted has altered, and that they want to begin subsequent MTD for VAT.

Even so, if your enterprise has not been given a letter but, that’s not to say it won’t.

Go through this post to uncover out about the gains of Earning Tax Digital, what HMRC’s letters indicate for you, and what steps you must consider subsequent.

Here’s what we address:

Why Generating Tax Electronic will reward your business enterprise

Building Tax Digital is 1 of the most significant modifications to United kingdom enterprises ever.

Not only does it enable to lessen problems when it comes to working with company admin, it improves productiveness for your business as well.

Paying out a lot less time on admin so you can aim on your small business is crucial – by going to electronic accounting, corporations can help save an regular of £17,000/27.6 days for each calendar year, according to study by Sage.

Why has my business been given a letter from HMRC?

If your small business has received a person of the MTD for VAT letters from HMRC, it is due to the fact you need to have to begin retaining electronic records and adjust the way you post your VAT.

The contents of the letters deliver you with a collection of measures that have to have to be taken so your company is next the MTD for VAT policies.

In the words of one particular of the letters from HMRC: “All VAT-registered businesses, regardless of taxable turnover, will need to get started working with MTD for VAT return durations beginning on or just after 1 April 2022.”

What do the letters (and Making Tax Electronic) suggest for me?

It signifies that due to the fact 1 April 2022, the way all VAT-registered firms maintain their information and submit VAT returns adjusted.

Now, HMRC demands your organization to maintain information digitally, although the submission of VAT info requires to be accomplished by means of MTD suitable application or bridging application.

What transpires if I have not received a letter from HMRC?

HMRC will be sending out far more letters to firms, so there is a possibility you will get one particular if your company is VAT registered and you have not by now signed up for MTD for VAT.

However, you really do not have to wait to get a letter from HMRC to commence using MTD for VAT – you can indication up for it now.

What do the HMRC Building Tax Electronic letters say?

The letters start by telling you that you need to have to get motion to get ready for Earning Tax Digital.

They condition that all VAT-registered organizations require to signal up for MTD for VAT, regardless of taxable turnover.

Upcoming, they go over a series of steps for you to choose (the letters go into more element):

  • You require MTD appropriate software program or bridging computer software
  • You have to use your application to preserve your digital documents
  • You should really go to the Gov.uk web-site so you can indication up for MTD for VAT
  • You have to let your program to function with MTD, then you can start out distributing your VAT Returns working with MTD.

The letters also warn that if you really do not get started using MTD before your first MTD for VAT return deadline (your unique deadline need to be on your letter), there’s a prospect you’ll be penalised.

Moreover, there is a reference to MTD exemptions (come across out much more at Gov.united kingdom), and a be aware pointing out that if you use an accountant or agent to assist you control your organization taxes, they can assist your shift to MTD for VAT.

Essential dates to be conscious of

Building Tax Digital is mandated for all VAT-registered enterprises as of 1 April 2022, but what other dates ought to you maintain in head?

Properly, that relies upon on when your initial comprehensive VAT period starts on or following this day.

If you are a enterprise with the standard quarterly VAT accounting intervals, you should maintain electronic records and post your VAT Return by way of MTD from the pursuing commence dates:

  • 1 April 2022: If the prior VAT quarter finished on 31 March 2022.
  • 1 Might 2022: If the prior VAT quarter finished on 30 April 2022.
  • 1 June 2022: If the preceding VAT quarter ended on 31 May possibly 2022.

The exact same logic applies to every month and yearly VAT accounting intervals, so preserve in brain when your very first comprehensive VAT accounting durations commences.

And given that there is however a want to file VAT Returns by a single calendar thirty day period and 7 times, at the hottest, this implies the preliminary VAT Returns for MTD for VAT will have to be submitted by the subsequent:

  • 7 August 2022 for a VAT quarter commencing 1 April 2022.
  • 7 September 2022 for a VAT quarter commencing 1 May 2022.
  • 7 October 2022 for a VAT quarter starting 1 June 2022.

There are also deadlines to sign-up for MTD for VAT to retain in mind.  

If you currently pay out by Direct Debit, really do not indication up also near to the day your VAT Return is due or you may perhaps pay back 2 times.

To stay away from this, make absolutely sure you really don’t indication up less than:

  • Seven days in advance of your return is owing
  • 5 times immediately after your return is due

And if you really don’t pay out by Direct Debit, make guaranteed you signal up at least a few days prior to the due day for your VAT Return.

The place you can get assistance making ready for MTD

To enable you with your preparations for Producing Tax Electronic, HMRC’s letters go over a few resources that will give you with the aid required to make the move to MTD for VAT a easy just one.

They contain common information on Building Tax Electronic and aspects on electronic report trying to keep (income and obtain data need to be held digitally, when invoices however need to have to be retained for at minimum six decades).

In addition, at Sage, we have made MTD Hub, which has responses to questions you may well have about MTD for VAT, and you can sign up for a webinar to guideline you together the way.

There’s also facts to support you make guaranteed you have MTD suitable software package, so you can regulate and submit your VAT Returns in the suitable way.

And we have set with each other the adhering to MTD for VAT articles or blog posts, so you can make the go to all things electronic a breeze:

Ultimate thoughts on Making Tax Electronic

Going to Producing Tax Digital for VAT may seem to be like a chore – 1 extra thing to fret about, on prime of all of the other issues you have to face with your business enterprise.

Even so, it will make a real difference to the way you handle your business enterprise admin. In addition, owning clarity on your enterprise funds and the tax you owe will signify you can deal with your cash a lot more successfully.

The very same goes for trying to keep digital data – the times of looking for paper documents or submitting them in a cabinet will be more than.

Possessing effortless entry to every thing by using a few clicks of your computer system or mobile telephone will mean you conserve time – and cut down a large amount of worry too.



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