Digitalisation reaches another rollout milestone
HMRC’s Making Tax Digital (MTD) project entered another key implementation phase on 1 April 2022, bringing more traders within the requirements of MTD for VAT. How will VAT-registered businesses be affected by this?
Many VAT-registered businesses have been required to comply with the MTD requirements in respect of VAT returns and digital record keeping since April 2019. However, this was restricted to businesses that had taxable turnover in excess of the compulsory registration threshold, i.e. voluntarily registered businesses haven’t had to worry about MTD. Until now.
For VAT periods starting on or after 1 April 2022, all VAT-registered businesses must be MTD-compliant. The detailed requirements are set out in VAT Notice 700/22, but broadly require the use of approved software so that information moves from the initial manual input through to HMRC automatically. Affected businesses should be prepared by now, but if not there may still be time to get things in place. For example, if a business has a VAT quarter ended 30 April 2022, it doesn’t need to start using MTD until 1 May, with the first return submitted under MTD being the quarter ended 31 July 2022. It's essential to act without further delay, as penalties can be applied for failure to comply.
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