Are You Ready For Making Tax Digital?
With just over a month until Making Tax Digital (MTD) becomes mandatory for all VAT registered businesses, are you MTD ready?
The days of logging into the HMRC website and typing in the nine numbers are almost gone. MTD means you have to keep digital records and file your VAT returns electronically using compatible software.
Below are the answers to some frequently asked questions:
Does this affect me?
If you are VAT registered or will be by 1 April 2022 then yes. If you plan to register for VAT after this, then you will be affected as soon as you register. If you plan to deregister soon then you may need to consider getting advice as to how this affects you.
When does it apply from?
This applies for VAT periods beginning on 1 April 2022 but there are steps to be taken before you lodge your first return so you should start the process as soon as possible.
What does it cost?
The MTD scheme itself doesn’t have a fee and you can sign yourself up online. Manual records will no longer be compliant so if that is your current record keeping method, you will have to change your process. There are lots of software providers available and you may be able to adapt spreadsheets, although this will need additional software. If you already use software it may be that you are already capable of being compliant.
What does keeping digital records mean?
Digital record keeping doesn’t mean keeping an electronic version of every document e.g. a scan of every invoice, although there can be benefits to doing this. It does mean you need to have electronic records of information such as the date of the invoice, the value and VAT rate.
What is the benefit?
Making changes to your record keeping isn’t always on the top of the to do list but if you are required to make a change there are ways to make it benefit you. These can be as simple as scanning all your documents to save space but most will find that it can have real business benefits such as more accurate reporting for management purposes. Most software is capable of much more that submitting your VAT returns and could save you a lot of time.
We have helped many of our clients make the transition of compliant software, ensure they understand the process and can see the benefits. If you’d like to learn more, or just want to check that you are compliant before the deadline, please get in touch with our MTD Taxperts by calling one of our offices or emailing [email protected].