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


Have you received a letter from HMRC about Generating Tax Electronic for VAT? If you have, you are not by itself.

HMRC is sending a series of Building Tax Digital (MTD) for VAT letters to qualified VAT-registered companies.

This is to permit them know that the way VAT documents are stored and VAT Returns are submitted has altered, and that they need to begin adhering to MTD for VAT.

Having said that, if your company has not acquired a letter yet, that’s not to say it won’t.

Go through this post to discover out about the rewards of Creating Tax Digital, what HMRC’s letters imply for you, and what ways you ought to get following.

Here’s what we address:

Why Making Tax Electronic will profit your company

Creating Tax Electronic is a single of the most critical improvements to British isles corporations ever.

Not only does it aid to cut down problems when it comes to dealing with business enterprise admin, it boosts productivity for your corporation far too.

Spending much less time on admin so you can aim on your company is important – by moving to digital accounting, companies can help you save an ordinary of £17,000/27.6 times for every year, in accordance to analysis by Sage.

Why has my enterprise acquired a letter from HMRC?

If your small business has received a person of the MTD for VAT letters from HMRC, it’s since you need to begin holding electronic records and adjust the way you submit your VAT.

The contents of the letters supply you with a sequence of methods that require to be taken so your business enterprise is following the MTD for VAT procedures.

In the words of a person of the letters from HMRC: “All VAT-registered firms, no matter of taxable turnover, will require to begin employing MTD for VAT return durations setting up on or after 1 April 2022.”

What do the letters (and Earning Tax Digital) signify for me?

It usually means that because 1 April 2022, the way all VAT-registered corporations preserve their documents and submit VAT returns transformed.

Now, HMRC requires your company to keep data digitally, though the submission of VAT facts demands to be performed via MTD suitable software or bridging software.

What takes place if I have not gained a letter from HMRC?

HMRC will be sending out more letters to firms, so there’s a chance you will acquire one if your business enterprise is VAT registered and you have not by now signed up for MTD for VAT.

However, you never have to wait to acquire a letter from HMRC to begin making use of MTD for VAT – you can sign up for it now.

What do the HMRC Creating Tax Electronic letters say?

The letters commence by telling you that you want to consider motion to get prepared for Making Tax Electronic.

They point out that all VAT-registered firms require to signal up for MTD for VAT, regardless of taxable turnover.

Subsequent, they include a sequence of measures for you to take (the letters go into far more depth):

  • You require MTD suitable application or bridging software package
  • You will have to use your software to hold your digital information
  • You must go to the Gov.united kingdom website so you can indication up for MTD for VAT
  • You have to let your computer software to function with MTD, then you can begin publishing your VAT Returns applying MTD.

The letters also alert that if you do not start off making use of MTD in advance of your to start with MTD for VAT return deadline (your particular deadline must be on your letter), there is a chance you are going to be penalised.

Furthermore, there is a reference to MTD exemptions (come across out much more at Gov.uk), and a be aware pointing out that if you use an accountant or agent to help you handle your organization taxes, they can assistance your shift to MTD for VAT.

Key dates to be aware of

Generating Tax Electronic is mandated for all VAT-registered firms as of 1 April 2022, but what other dates will have to you keep in head?

Perfectly, that relies upon on when your first complete VAT period commences on or just after this date.

If you are a enterprise with the conventional quarterly VAT accounting periods, you will have to maintain electronic information and post your VAT Return via MTD from the adhering to start off dates:

  • 1 April 2022: If the past VAT quarter ended on 31 March 2022.
  • 1 May 2022: If the earlier VAT quarter ended on 30 April 2022.
  • 1 June 2022: If the previous VAT quarter finished on 31 Might 2022.

The very same logic applies to monthly and annual VAT accounting intervals, so preserve in mind when your very first full VAT accounting durations begins.

And given that there is still a have to have to file VAT Returns by one calendar month and 7 days, at the hottest, this indicates the preliminary VAT Returns for MTD for VAT will have to be filed by the pursuing:

  • 7 August 2022 for a VAT quarter starting 1 April 2022.
  • 7 September 2022 for a VAT quarter beginning 1 May perhaps 2022.
  • 7 Oct 2022 for a VAT quarter beginning 1 June 2022.

There are also deadlines to sign-up for MTD for VAT to continue to keep in head.  

If you presently spend by Immediate Debit, really don’t signal up also close to the date your VAT Return is thanks or you may fork out twice.

To stay away from this, make positive you never signal up fewer than:

  • 7 times prior to your return is thanks
  • 5 times soon after your return is thanks

And if you really don’t fork out by Immediate Debit, make confident you indicator up at minimum 3 times ahead of the thanks date for your VAT Return.

Exactly where you can get support preparing for MTD

To aid you with your preparations for Earning Tax Digital, HMRC’s letters address a handful of resources that will present you with the aid required to make the shift to MTD for VAT a sleek one.

They involve general data on Generating Tax Digital and details on digital history trying to keep (profits and order records have to be stored digitally, whilst invoices continue to will need to be retained for at minimum 6 decades).

In addition, at Sage, we have produced MTD Hub, which has answers to thoughts you may have about MTD for VAT, and you can indication up for a webinar to guidebook you along the way.

There is also data to aid you make confident you have MTD compatible software program, so you can regulate and submit your VAT Returns in the right way.

And we’ve set with each other the following MTD for VAT content articles, so you can make the shift to all things digital a breeze:

Remaining ideas on Building Tax Digital

Moving to Creating Tax Electronic for VAT might feel like a chore – one a lot more thing to fret about, on prime of all of the other worries you have to face with your enterprise.

On the other hand, it will make a authentic big difference to the way you manage your organization admin. In addition, obtaining clarity on your small business funds and the tax you owe will mean you can handle your cash extra correctly.

The same goes for keeping digital information – the times of searching for paper files or submitting them in a cupboard will be about.

Obtaining quick entry to every thing through a couple clicks of your computer or cellular telephone will signify you conserve time – and lower a large amount of tension far too.


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