Making Tax Digital requirements to smaller VAT businesses

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19 July 2021

Since the succesful introduction of Making Tax Digital (MTD) in 2019, businesses that are VAT registered have been the focus of the system roll out. Mel Stone, Associate Partner, provides some insight into the changes due to come into effect from 1 April 2022 and what that will mean for the smaller VAT registered businesses.

Changes to thresholds

Making Tax Digital (MTD) has been around for a couple of years now, for those VAT registered businesses exceeding the current VAT threshold of £85,000. However, these requirements are extending to those VAT registered businesses below the VAT threshold from 1 April 2022.

Compliance timescales

Ths means that all VAT registered businesses will be required to report their VAT and meet record keeping obligations under MTD from 1 April 2022. Businesses must keep digital records and use software to submit their VAT returns to HMRC. There are many types of software available, but it needs to be MTD compliant by being capable of receiving information from HMRC digitally via HMRC’s Application Programming Interface (API) platform.

The relevant first VAT period will be the first one starting on or after 1 April 2022, which needs to be submitted to HMRC. Some smaller businesses may already be submitting their VAT returns through MTD compliant software voluntarily, but for those who are not it is of paramount importance that they are ready from 1 April 2022 to do so.

Although, these changes may seem like an onerous requirement of HMRC at first, there are advantages to the need to use software. For example, the information is in real time, which means that you as business owners are able to make those quicker business decisions and us as your advisers are able to assist you with those in real time.

How can Haines Watts help?

We advise clients with a broad range of tax related matters across a number of sectors throughout the South West.

Speak to us now. We would highly recommend that you start using the software now so that you are familiar with using it before 1 April 2022. We can help you set the software up, provide you with the training and support you require throughout the process.

If you are interested in attending 1-2-1 training or a group training session (with other attendees’ present), please get in touch with your usual Haines Watts contact or Mel Stone.