HMRC making VAT tax returns digital by April
- Credit: Getty Images/iStockphoto
All VAT-registered businesses will have to do tax returns digitally from Friday, April 1.
The new scheme by HMRC called ‘Making Tax Digital’ is designed to help businesses eliminate common errors and save time managing their tax by doing it online.
‘Making Tax Digital’ or (MTD) for VAT is part of the digitalisation of UK tax. In a recent independent study of over 2,000 businesses, 69% reported experiencing at least one benefit from MTD. These included preparing and submitting returns faster and increased confidence that they were getting tax right. Sixty-seven per cent of businesses also felt MTD had reduced the potential for mistakes in at least one aspect of the record-keeping, preparing and submitting returns process.
As of December 2021, nearly 1.6 million taxpayers had joined MTD for VAT with more than 11 million returns successfully submitted. Around a third of VAT-registered businesses with taxable turnover below £85,000 have voluntarily signed up to MTD for VAT ahead of April 2022, and thousands more are signing up each week.
Since April 2019, businesses with a taxable turnover above £85,000 have already been required to follow MTD, keeping digital records and filing VAT returns using MTD compatible software.
In July 2020 it was announced that all VAT registered businesses must file digitally through MTD from April 2022, regardless of turnover. HMRC is now reminding businesses below the £85,000 threshold of the steps which they need to take to be ready.
To sign up to MTD VAT, businesses, or an agent on a businesses’ behalf, need to: Step 1: Visit GOV.UK and choose MTD-compatible software Step 2: Keep digital records starting from 1 April 2022 or the beginning of their VAT period Step 3: Sign up and submit their VAT Return through MTD.
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If businesses have not yet signed up to MTD for VAT, they should do so now to ensure they are ready in time for the April 2022 deadline.