All unincorporated businesses, including sole traders, the self-employed and trading partnerships, will be taxed on…
The final stage of Making Tax Digital (MTD) for VAT is just a few short months away.
From 1 April 2022, even the smallest VAT registered business will need to comply with the quarterly digital recording and reporting of VAT – including those below the £85,000 VAT threshold who are voluntarily registered.
Millions of UK VAT registered businesses above the VAT threshold of £85,000 have already begun complying with MTD since it was introduced several years ago.
They have invested time and money to bring their systems and processes up to date with the tax regime’s requirements.
Now many more small businesses are likely to be caught out by this change, which will require them to use the latest MTD compliant cloud accounting software.
Given the scale of the change and the steps needed to comply with the regulations, businesses that are affected by this change must act now to ensure they are compliant.
To achieve this, they may need to invest in:
- HMRC compliant software
- Additional training
- Help from their accountant.
MTD compliant software
You must use the correct software to meet HM Revenue & Customs’ (HMRC) MTD requirements.
HMRC requires software that can:
- Keep records in a digital form
- Preserve digital records in a digital form
- Create a VAT or tax return from the digital records held in functional compatible software and provide HMRC with this information digitally
- Provide HMRC with VAT and tax data voluntarily
- Receive information from HMRC via the API platform that the business has complied.
Many of the existing cloud accounting platforms out there have been created or revised to ensure that they meet the requirements of MTD for VAT.
Not only that, but they offer many other advantages to businesses of all sizes. Often helping owners to save time and money while providing critical real-time insights into a business’s financial health, which can be invaluable for decision-making.
We can help you find online cloud accounting software that is suited to you and your business’s needs, thanks to our experience supporting many other organisations with this transition.
Failure to comply
Given the scale of the change, there are concerns that some businesses may not be ready in time.
Unlike the initial launch of MTD, there will be no soft-landing period for this latest stage and businesses can expect to be fined or even investigated by HMRC for non-compliance.
It is, therefore, essential that you seek advice to help you with your preparations for this change if you are not yet compliant.
We have already helped many businesses migrate to the latest cloud accounting technology in preparation for MTD, delivering many benefits beyond compliance.
Given the impending implementation of these new rules and the risks associated with not meeting them by April next year, we are ready and able to support businesses, like yours, as they prepare for MTD.