Making Tax Digital - Changes from 1st April 2022
HMRC is reminding businesses with turnover below the £85,000 threshold of the steps they need to take regarding changed to Making Tax Digital (MTD) for VAT from 1st April 2022. Up to this point, only VAT registered businesses with turnover above £85,000 had to file returns through MTD.
For VAT return periods starting on or after 1st April 2022, VAT registered businesses need to keep digital records and file returns through approved software. Currently MTD is compulsory for business with annual turnover above the VAT registration threshold of £85,000, but the forthcoming change brings all VAT registered businesses into the MTD regime.
Under MTD, the records that must be maintained digitally include:
- Business name, address and VAT number;
- VAT accounting scheme;
- VAT on goods and services you supply and receive;
- The ‘value of supply’ and ‘time of supply’ of goods and services supplied and received;
- Adjustments to VAT returns;
- Rate of VAT charged on goods and services supplied;
- Reverse charge transactions.
The above list is not exhaustive.
Affected businesses must sign up to Making Tax Digital at least five days after the deadline date of their last non-MTD VAT return, and a minimum of seven days before the first MTD VAT return deadline.
Exemption from MTD filing may be available in certain circumstances if it is not reasonable or practicable for them to use digital tools. Cost alone will not be an acceptable reason according to HMRC.
Failure to sign up for Making Tax Digital can result in a penalty being charged.
If you need further advice or assistance in making the change to MTD, including recommendations of appropriate software, we can help. Please contact us, GBAC, accountants in Barnsley, on 01226 298298.