Businesses have been reminded to take steps to prepare for Making Tax Digital for Value Added Tax (VAT) before it becomes mandatory for all VAT-registered businesses from 1 April this year.
Making Tax Digital for VAT is part of the overall digitalisation of UK Tax.
As of December 2021, nearly 1.6 million taxpayers had joined Making Tax Digital 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 Making Tax Digital for VAT ahead of April 2022.
Since April 2019, businesses with a taxable turnover above £85,000 have already been required to follow Making Tax Digital, keeping digital records and filing VAT returns using Making Tax Digital compatible software.
In July 2020, it was announced that all VAT-registered businesses must file digitally through Making Tax Digital 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 Making Tax Digital VAT, businesses, or an agent on a businesses’ behalf, need to:
- visit GOV.UK and choose Making Tax Digital-compatible software
- keep digital records starting from 1 April 2022 or the beginning of their VAT period
- sign up and submit their VAT Return through Making Tax Digital
If businesses have not yet signed up to Making Tax Digital for VAT, they should do so now to ensure they are ready in time for the April 2022 deadline.
Mike Cherry, FSB National Chair, said: “We have worked hard to ensure Making Tax Digital launch dates were adjusted to give small businesses more time to prepare and allow more competition to open up in the accounting software market. It’s important that firms do all they can to get ahead of deadlines and access the affordable platforms that are now available; if they are members of FSB, they will have access to a new easy Making Tax Digital member service that we are creating.
“We’ll continue to work with government, and through our support services, to minimise the admin and cost impacts of Making Tax Digital on small firms whilst unlocking the productivity gains the initiative could bring.”