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Maxing Tax Digital (MTD) for VAT update


Maxing Tax Digital (MTD) for VAT update

By law, all VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

If you do not sign up for MTD and file VAT returns via compatible software, you may have to pay a penalty. The best way to avoid penalties is to start using MTD now.

Photo by Lukas Blazek on Unsplash

What businesses need to do now

  1. Choose MTD-compatible software that is right for you and your business. A list of software, including free options, is available at gov.uk.
  2. Set up the permissions in your software to work with MTD. Further information is available at https://www.gov.uk/permission-software-tax-information. We can assist with the set-up process.
  3. Keep digital records for your current and future VAT returns. Details on what records must you need to keep is available at gov.uk - records they need to keep.
  4. Sign up for MTD and file VAT returns using MTD-compatible software. More information is available at gov.uk.

If your business is already signed up for MTD for VAT, no further action is required.

Information for businesses due to file by 7 November

If the turnover for your business is below the VAT threshold of £85,000 and you have not signed up to MTD in time to file your next return by 7 November, you can still use the existing VAT online account to file for this return only.

In order to file any returns after 1 December the above steps must be completed.

HMRC are contacting businesses directly to let them know.

How to apply for an exemption from using MTD-compatible software

If you are already exempt from filing VAT returns online or if you or your business are subject to insolvency procedures, you are automatically exempt from MTD for VAT. You can check if you can apply for an exemption on gov.uk if it is not reasonable or practical for you to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.

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