What the HMRC Making Tax Digital for VAT letters mean for your business

Latonia Kimberly


Have you been given a letter from HMRC about Building Tax Digital for VAT? If you have, you are not alone.

HMRC is sending a collection of Producing Tax Electronic (MTD) for VAT letters to suitable VAT-registered companies.

This is to permit them know that the way VAT records are kept and VAT Returns are submitted has improved, and that they have to have to get started subsequent MTD for VAT.

Even so, if your small business has not been given a letter nonetheless, that is not to say it won’t.

Go through this write-up to come across out about the positive aspects of Creating Tax Electronic, what HMRC’s letters necessarily mean for you, and what actions you should acquire future.

Here’s what we go over:

Why Creating Tax Digital will gain your business enterprise

Building Tax Electronic is one of the most vital changes to British isles businesses at any time.

Not only does it assistance to lower problems when it arrives to dealing with enterprise admin, it boosts productiveness for your business as well.

Shelling out fewer time on admin so you can emphasis on your business enterprise is important – by shifting to electronic accounting, businesses can help save an common of £17,000/27.6 times per year, according to research by Sage.

Why has my business received a letter from HMRC?

If your enterprise has obtained one particular of the MTD for VAT letters from HMRC, it is mainly because you need to commence retaining electronic documents and adjust the way you submit your VAT.

The contents of the letters deliver you with a collection of ways that require to be taken so your organization is subsequent the MTD for VAT regulations.

In the phrases of a person of the letters from HMRC: “All VAT-registered corporations, regardless of taxable turnover, will will need to start out applying MTD for VAT return periods commencing on or soon after 1 April 2022.”

What do the letters (and Generating Tax Digital) imply for me?

It indicates that due to the fact 1 April 2022, the way all VAT-registered businesses retain their documents and post VAT returns adjusted.

Now, HMRC demands your business enterprise to continue to keep information digitally, even though the submission of VAT information demands to be carried out by using MTD suitable application or bridging software package.

What happens if I have not been given a letter from HMRC?

HMRC will be sending out additional letters to companies, so there is a chance you will acquire a person if your enterprise is VAT registered and you have not currently signed up for MTD for VAT.

Nonetheless, you really don’t have to hold out to acquire a letter from HMRC to begin applying MTD for VAT – you can indicator up for it now.

What do the HMRC Producing Tax Digital letters say?

The letters start by telling you that you require to choose motion to get completely ready for Producing Tax Electronic.

They point out that all VAT-registered firms require to indication up for MTD for VAT, regardless of taxable turnover.

Next, they deal with a series of actions for you to take (the letters go into far more element):

  • You have to have MTD suitable software or bridging software program
  • You will have to use your software to continue to keep your electronic data
  • You should really go to the Gov.british isles internet site so you can signal up for MTD for VAT
  • You have to allow your program to do the job with MTD, then you can commence submitting your VAT Returns making use of MTD.

The letters also alert that if you really do not start applying MTD right before your initial MTD for VAT return deadline (your precise deadline must be on your letter), there’s a likelihood you’ll be penalised.

On top of that, there’s a reference to MTD exemptions (find out much more at Gov.united kingdom), and a notice pointing out that if you use an accountant or agent to assist you deal with your small business taxes, they can help your shift to MTD for VAT.

Essential dates to be conscious of

Generating Tax Electronic is mandated for all VAT-registered businesses as of 1 April 2022, but what other dates should you continue to keep in intellect?

Very well, that relies upon on when your very first full VAT period starts on or right after this date.

If you are a organization with the standard quarterly VAT accounting durations, you have to preserve digital documents and submit your VAT Return by way of MTD from the subsequent begin dates:

  • 1 April 2022: If the former VAT quarter finished on 31 March 2022.
  • 1 May possibly 2022: If the prior VAT quarter ended on 30 April 2022.
  • 1 June 2022: If the preceding VAT quarter finished on 31 May 2022.

The identical logic applies to monthly and yearly VAT accounting intervals, so retain in head when your first complete VAT accounting periods starts.

And considering the fact that there is even now a need to have to file VAT Returns by 1 calendar month and seven days, at the newest, this suggests the initial VAT Returns for MTD for VAT should be submitted by the subsequent:

  • 7 August 2022 for a VAT quarter beginning 1 April 2022.
  • 7 September 2022 for a VAT quarter commencing 1 May possibly 2022.
  • 7 Oct 2022 for a VAT quarter beginning 1 June 2022.

There are also deadlines to register for MTD for VAT to retain in brain.  

If you currently pay out by Direct Debit, never signal up far too shut to the day your VAT Return is owing or you may pay twice.

To avoid this, make confident you do not sign up considerably less than:

  • 7 days prior to your return is thanks
  • Five times right after your return is thanks

And if you never fork out by Direct Debit, make absolutely sure you indicator up at least 3 times just before the thanks date for your VAT Return.

The place you can get assist getting ready for MTD

To assist you with your preparations for Making Tax Electronic, HMRC’s letters include a handful of resources that will present you with the help demanded to make the move to MTD for VAT a easy one.

They contain basic information on Generating Tax Electronic and aspects on digital record preserving (sales and invest in data will have to be kept digitally, whilst invoices even now will need to be retained for at the very least six yrs).

In addition, at Sage, we have designed MTD Hub, which has answers to questions you could have about MTD for VAT, and you can sign up for a webinar to manual you alongside the way.

There’s also data to assistance you make positive you have MTD appropriate software program, so you can control and submit your VAT Returns in the appropriate way.

And we’ve put alongside one another the adhering to MTD for VAT articles or blog posts, so you can make the shift to all matters digital a breeze:

Closing ideas on Earning Tax Electronic

Relocating to Making Tax Digital for VAT might feel like a chore – one particular much more thing to fret about, on top rated of all of the other issues you have to deal with with your organization.

On the other hand, it will make a genuine distinction to the way you handle your enterprise admin. In addition, acquiring clarity on your company finances and the tax you owe will mean you can deal with your income additional properly.

The exact goes for preserving electronic data – the days of looking for paper paperwork or filing them in a cupboard will be in excess of.

Possessing easy accessibility to all the things through a several clicks of your computer or cellular cell phone will mean you help save time – and reduce a large amount of stress also.


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