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

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

HMRC is sending a collection of Generating Tax Digital (MTD) for VAT letters to suitable VAT-registered enterprises.

This is to let them know that the way VAT records are kept and VAT Returns are submitted has changed, and that they will need to commence pursuing MTD for VAT.

Nonetheless, if your business has not received a letter but, that is not to say it won’t.

Study this article to obtain out about the rewards of Producing Tax Electronic, what HMRC’s letters mean for you, and what techniques you should acquire upcoming.

Here’s what we address:

Why Generating Tax Digital will advantage your business

Creating Tax Digital is a single of the most significant changes to British isles companies at any time.

Not only does it aid to lower glitches when it will come to working with organization admin, it enhances productivity for your company way too.

Investing much less time on admin so you can concentrate on your organization is crucial – by moving to digital accounting, companies can help you save an regular of £17,000/27.6 times per year, according to exploration by Sage.

Why has my organization gained a letter from HMRC?

If your enterprise has obtained 1 of the MTD for VAT letters from HMRC, it is due to the fact you need to have to start off holding digital records and improve 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 pursuing the MTD for VAT rules.

In the text of one of the letters from HMRC: “All VAT-registered corporations, irrespective of taxable turnover, will need to have to start using MTD for VAT return periods setting up on or after 1 April 2022.”

What do the letters (and Producing Tax Electronic) imply for me?

It signifies that considering the fact that 1 April 2022, the way all VAT-registered corporations hold their information and post VAT returns changed.

Now, HMRC requires your business enterprise to continue to keep records digitally, when the submission of VAT info requirements to be performed by means of MTD appropriate application or bridging software program.

What happens if I have not been given a letter from HMRC?

HMRC will be sending out a lot more letters to businesses, so there is a chance you will obtain 1 if your company is VAT registered and you’ve not presently signed up for MTD for VAT.

Nevertheless, you never have to wait to acquire a letter from HMRC to begin employing MTD for VAT – you can indication up for it now.

What do the HMRC Making Tax Digital letters say?

The letters get started by telling you that you need to have to take motion to get all set for Earning Tax Electronic.

They point out that all VAT-registered corporations have to have to indication up for MTD for VAT, regardless of taxable turnover.

Future, they deal with a collection of techniques for you to just take (the letters go into extra element):

• You will need MTD compatible computer software or bridging software program

• You ought to use your software program to maintain your digital documents

• You ought to go to the Gov.uk site so you can signal up for MTD for VAT

• You have to permit your program to get the job done with MTD, then you can get started distributing your VAT Returns working with MTD.

The letters also warn that if you really don’t commence using MTD in advance of your to start with MTD for VAT return deadline (your specific deadline should really be on your letter), there’s a opportunity you will be penalised.

Also, there’s a reference to MTD exemptions (obtain out additional at Gov.british isles), and a be aware pointing out that if you use an accountant or agent to aid you take care of your organization taxes, they can assistance your go to MTD for VAT.

Essential dates to be conscious of

Creating Tax Electronic is mandated for all VAT-registered enterprises as of 1 April 2022, but what other dates must you hold in intellect?

Nicely, that depends on when your initially entire VAT period of time starts on or right after this date.

If you are a business enterprise with the common quarterly VAT accounting intervals, you have to continue to keep digital documents and submit your VAT Return by means of MTD from the following get started dates:

• 1 April 2022: If the previous VAT quarter ended on 31 March 2022.
• 1 May well 2022: If the prior VAT quarter ended on 30 April 2022.
• 1 June 2022: If the prior VAT quarter ended on 31 Could 2022.

The identical logic applies to monthly and once-a-year VAT accounting intervals, so hold in head when your initial complete VAT accounting intervals commences.

And because there is even now a want to file VAT Returns by a person calendar month and seven times, at the hottest, this implies the preliminary VAT Returns for MTD for VAT must be filed by the next:

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

There are also deadlines to register for MTD for VAT to retain in head.  

If you previously fork out by Immediate Debit, never signal up much too close to the day your VAT Return is because of or you may pay 2 times.

To stay away from this, make sure you really do not indication up considerably less than:

• Seven times in advance of your return is because of
• Five times following your return is thanks

And if you do not shell out by Immediate Debit, make positive you signal up at least three days before the due date for your VAT Return.

Wherever you can get aid planning for MTD

To help you with your preparations for Building Tax Digital, HMRC’s letters include a couple of sources that will present you with the guidance needed to make the go to MTD for VAT a easy one.

They contain common data on Creating Tax Digital and aspects on electronic report retaining (income and purchase records will have to be saved digitally, even though invoices still have to have to be retained for at least six yrs).

In addition, at Sage, we’ve made MTD Hub, which has solutions to concerns you may well have about MTD for VAT, and you can signal up for a webinar to guide you along the way.

There is also details to assist you make absolutely sure you have MTD suitable software package, so you can regulate and submit your VAT Returns in the correct way.

And we’ve put jointly the subsequent MTD for VAT articles, so you can make the go to all things digital a breeze:

Remaining thoughts on Creating Tax Electronic

Moving to Producing Tax Electronic for VAT might look like a chore – a person extra detail to get worried about, on top of all of the other difficulties you have to face with your business enterprise.

Having said that, it will make a true big difference to the way you deal with your enterprise admin. In addition, getting clarity on your business finances and the tax you owe will mean you can manage your money extra successfully.

The similar goes for trying to keep electronic information – the days of seeking for paper documents or filing them in a cupboard will be about.

Getting simple accessibility to every little thing via a number of clicks of your personal computer or cellular telephone will mean you save time – and decrease a good deal of stress far too.