If your company is VAT-registered, you’ve likely heard concerning Making Tax Digital (MTD) and MTD for VAT specifically. The law was introduced in April 2019 and it impacted all VAT-registered companies above the threshold of VAT (currently the threshold is £90,000). However, as of now, MTD for VAT is available to all VAT registered businesses. This includes companies that are voluntarily registered for VAT and are not over the threshold. They should save their VAT accounting documents in a digital format and utilize compatible software to manage tax accounting for VAT returns HMRC. MTD for VAT gives you the chance to transform your accounting. When you switch to software or update your existing software to ensure it is compatible. You will be able to modernize and receive access to the most recent technology. In the same way, your accounting administration workload is decreased.

Can I simply carry on submitting my VAT Returns as normal?

No, not at all.

From 1 November 2022, you won’t be able to use your existing VAT online account to file quarterly or monthly VAT returns HMRC. (If you submit annual VAT returns HMRC says you can access the VAT account online through 15 May 2023.)

The only way to be able to file your VAT returns is by enrolling in MTD to pay VAT, and together MTD compatible software and you must begin doing this now. Otherwise you risk being punished by HMRC. But, if your company’s turnover is below the £90,000 VAT threshold. You’re not registered with MTD on VAT with sufficient time to file your tax return for the next year by the 7th of November in 2022, you’ll be able to access the existing tax online VAT account. Note that it is only for the return.

After that, in the case of monthly or quarterly taxes, VAT returners will have to utilize MTD-compatible software to file all returns due after the 1st of December in 2022. If you don’t do this, you could be penalized. HMRC has started sending out letters and emails to companies who need to begin adhering to these MTD for VAT regulations. If you haven’t already registered your VAT-registered company for Making Tax Digital yet, you’ll likely get one. Instead of being patient, it’s accurate to make the changes to your process immediately. This starts by registering for MTD to get VAT.

How to register for a VAT account and submit a VAT Return online

If the turnover that is tax-deductible for your company falls below the threshold of VAT and you’ve not yet registered your business voluntarily for VAT, this could be the right time to do so. The registration process allows you to claim VAT on items you buy for your company. A lot of businesses sign up voluntarily as it makes their business appear more competent, particularly when they sell to other businesses. The aim for Making Tax Digital in VAT is to ease VAT accounting. If you’ve been discouraged in the past due to the administrative requirements for VAT tax accounting, this is an excellent opportunity to take advantage of.

You can apply for VAT on the internet or have your accountant do this for you. If you’re doing it yourself, you’ll have to establish a Government Gateway account for your company (if you don’t own one). After you’ve registered for VAT, you’ll get your VAT number which you can use in the tax invoices. The time to start tax accounting for VAT is the day that HMRC registers you. After you have a Tax ID, you may also file your VAT returns HMRC online when the date arrives. You can make use of accounting software to file VAT returns HMRC for submission.

What you need to register for MTD for VAT

To register for MTD for VAT, you’ll need gather together a few bits of information:

• The email address you use for your business
• Government Gateway ID you use for the business
• Your VAT registration number
• latest VAT Return
• National Insurance number if you’re a sole trader
• Your company registration number and Unique Taxpayer Reference (UTR) if registering a limited company.

How to register for MTD for VAT

It is important to select the software you plan to use prior to making an application to receive MTD to pay VAT. You can register for MTD for VAT by clicking register for MTD. At the Gov.uk website, then answer the questions, which will involve providing the information mentioned earlier. There are limits regarding when you can sign up for the program. So you don’t accidentally make an more payment on your current tax return.

It is not advisable to register less than seven days before the date. That your Tax Return due date and less than 5 calendar days after the date your VAT Return is due. You should receive a confirmation from HMRC within three days. It is important to note that the MTD for VAT feature within your accounting software needs to be activated. When you have the details of your registration according to HMRC. So, activation will not be automated.

Conclusion

Making Tax Digital for VAT represents a significant shift in how businesses handle their VAT returns HMRC. The requirement to maintain digital records and use compatible software can seem daunting, but it ultimately offers an opportunity to modernize. Streamline tax accounting processes. FineX Outsourcing can help businesses navigate this transition. By providing expert guidance and support, FineX Outsourcing ensures that your business complies with MTD for VAT regulations smoothly and efficiently. Our services include helping you select compatible software, assisting with the registration process, and offering ongoing support to ensure your VAT accounting is as efficient and accurate as possible.