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

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


Have you gained a letter from HMRC about Generating Tax Electronic for VAT? If you have, you are not on your own.

HMRC is sending a sequence of Producing Tax Digital (MTD) for VAT letters to eligible VAT-registered companies.

This is to enable them know that the way VAT data are saved and VAT Returns are submitted has adjusted, and that they need to have to start out following MTD for VAT.

However, if your small business has not received a letter nevertheless, that’s not to say it will not.

Browse this report to obtain out about the positive aspects of Generating Tax Electronic, what HMRC’s letters indicate for you, and what ways you ought to consider following.

Here’s what we include:

Why Building Tax Electronic will gain your organization

Producing Tax Electronic is one of the most important alterations to United kingdom companies ever.

Not only does it aid to lessen problems when it comes to dealing with company admin, it improves efficiency for your firm much too.

Spending less time on admin so you can aim on your business is vital – by transferring to electronic accounting, enterprises can conserve an common of £17,000/27.6 times for every year, according to investigate by Sage.

Why has my enterprise acquired a letter from HMRC?

If your business enterprise has obtained a person of the MTD for VAT letters from HMRC, it is since you will need to commence keeping electronic documents and improve the way you submit your VAT.

The contents of the letters give you with a series of ways that need to have to be taken so your business enterprise is next the MTD for VAT policies.

In the words and phrases of 1 of the letters from HMRC: “All VAT-registered businesses, no matter of taxable turnover, will need to get started utilizing MTD for VAT return periods setting up on or just after 1 April 2022.”

What do the letters (and Building Tax Electronic) necessarily mean for me?

It implies that since 1 April 2022, the way all VAT-registered businesses keep their documents and post VAT returns adjusted.

Now, HMRC necessitates your enterprise to retain data digitally, though the submission of VAT info requires to be accomplished via MTD suitable software or bridging software package.

What takes place if I’ve not been given a letter from HMRC?

HMRC will be sending out a lot more letters to businesses, so there is a opportunity you will receive just one if your business enterprise is VAT registered and you’ve not currently signed up for MTD for VAT.

Having said that, you really don’t have to hold out to obtain a letter from HMRC to get started utilizing MTD for VAT – you can indication up for it now.

What do the HMRC Building Tax Electronic letters say?

The letters start out by telling you that you require to choose action to get completely ready for Building Tax Digital.

They condition that all VAT-registered companies have to have to indication up for MTD for VAT, regardless of taxable turnover.

Next, they protect a series of ways for you to consider (the letters go into more depth):

  • You have to have MTD compatible computer software or bridging computer software
  • You should use your application to keep your digital documents
  • You should really go to the Gov.british isles internet site so you can sign up for MTD for VAT
  • You have to allow for your computer software to perform with MTD, then you can start out publishing your VAT Returns making use of MTD.

The letters also alert that if you never start off applying MTD ahead of your to start with MTD for VAT return deadline (your unique deadline need to be on your letter), there is a chance you’ll be penalised.

Also, there’s a reference to MTD exemptions (uncover out extra at Gov.british isles), and a note pointing out that if you use an accountant or agent to assistance you regulate your small business taxes, they can support your move to MTD for VAT.

Important dates to be conscious of

Producing Tax Digital is mandated for all VAT-registered companies as of 1 April 2022, but what other dates will have to you continue to keep in brain?

Very well, that depends on when your 1st full VAT time period starts off on or immediately after this date.

If you are a small business with the common quarterly VAT accounting durations, you will have to preserve electronic records and submit your VAT Return by MTD from the adhering to get started dates:

  • 1 April 2022: If the preceding VAT quarter finished on 31 March 2022.
  • 1 Could 2022: If the past VAT quarter finished on 30 April 2022.
  • 1 June 2022: If the prior VAT quarter finished on 31 Might 2022.

The similar logic applies to monthly and once-a-year VAT accounting intervals, so preserve in brain when your 1st total VAT accounting periods commences.

And due to the fact there’s however a have to have to file VAT Returns by 1 calendar thirty day period and seven times, at the most up-to-date, this means the initial VAT Returns for MTD for VAT have to be filed by the following:

  • 7 August 2022 for a VAT quarter starting 1 April 2022.
  • 7 September 2022 for a VAT quarter starting 1 Might 2022.
  • 7 Oct 2022 for a VAT quarter beginning 1 June 2022.

There are also deadlines to sign-up for MTD for VAT to preserve in mind.  

If you now spend by Immediate Debit, do not indication up far too close to the day your VAT Return is due or you may pay back 2 times.

To avoid this, make certain you really do not signal up less than:

  • Seven days prior to your return is thanks
  • 5 days right after your return is due

And if you really don’t shell out by Direct Debit, make confident you sign up at minimum a few times right before the because of day for your VAT Return.

Where you can get assistance preparing for MTD

To assist you with your preparations for Generating Tax Digital, HMRC’s letters protect a number of resources that will supply you with the help expected to make the move to MTD for VAT a smooth one particular.

They include common info on Making Tax Electronic and aspects on electronic history retaining (gross sales and acquire data have to be retained digitally, when invoices still want to be retained for at the very least six a long time).

In addition, at Sage, we’ve developed MTD Hub, which has solutions to queries you might have about MTD for VAT, and you can signal up for a webinar to information you together the way.

There’s also info to help you make guaranteed you have MTD appropriate software package, so you can deal with and post your VAT Returns in the correct way.

And we’ve place together the next MTD for VAT articles, so you can make the transfer to all items digital a breeze:

Closing views on Producing Tax Electronic

Relocating to Building Tax Electronic for VAT may possibly appear like a chore – a single additional thing to get worried about, on major of all of the other problems you have to experience with your business enterprise.

Even so, it will make a real variance to the way you manage your business admin. In addition, possessing clarity on your organization finances and the tax you owe will suggest you can take care of your dollars far more correctly.

The exact same goes for trying to keep digital data – the days of looking for paper documents or submitting them in a cabinet will be around.

Possessing simple entry to every thing via a few clicks of your personal computer or cellular cellular phone will imply you save time – and reduce a great deal of stress too.


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