Are you VAT registered? If so, you might want to read on as Making Tax Digital for VAT definitely affects you!

Making Tax Digital (MTD) is a key part of the government plans to make it easier for businesses and individuals to get their tax right and keep on top of their affairs. The first phase was rolled out in April 2019 and now we’re onto phase two.

If you are a VAT registered business with a turnover of over £85,000, you can put your feet up for now as you should already be registered for MTD and filing your VAT returns in an MTD compatible way.

If you are a VAT registered business with a turnover of under £85,000, from April 2022 you will also need to be registered for MTD and filing your VAT returns in an MTD compatible way. Your first MTD VAT return will be for your first full VAT period after 1 April 2022.

  • Monthly VAT returns = ME April 2022
  • QE Mar/Jun/Sep/Dec = QE June 2022
  • QE Jan/Apr/Jul/Oct = QE July 2022
  • QE Feb/May/Aug/Nov = QE August 2022

If you already use a Cloud Accounting Package such as Xero or QuickBooks there is only one more step to take, and that is to register with HMRC for MTD. How you currently prepare your VAT return could indicate that you’re not MTD ready.

The following methods will not be MTD compatible:

  • Use of pen and paper
  • Use of out of date, unsupported software
  • Use of spreadsheets (without a bridging tool)

So your options are to:

  • Move (or upgrade) to software that is MTD compatible
  • Use a bookkeeper (ensure they are MTD ready)
  • Use Dodd & Co spreadsheet and we submit your VAT
  • Dodd & Co prepare & submit your VAT on your behalf

Don’t worry, if you are affected someone from Dodds will be in touch soon to discuss your options with you and come to a solution which is right for you and your business. Also, in some cases exceptions can be allowed by applying for an exemption to HMRC, again if this is suitable to your circumstances, we will support you through this process. Please note, MTD for Income Tax was coming in April 2023, but has now been delayed to April 2024.

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