Making Tax Digital for VAT (MTD VAT) is the same as filing a Vat return as before except that this now has to be done using any of the approved software by HMRC. Businesses were required to file their first MTD returns for the VAT quarter starting on or after 1 April 2022 MTD was introduced in April 2019 and it affects all businesses registered for vat.

Currently, the Vat threshold for businesses is £85000. Where your business turnover is above this for the last 12 months, your business ought to register for Vat. To sign up for MTD VAT, you must have the following:

i) A compatible software

ii) Your business email address

iii) Your Government Gateway ID

There are other documents to have to hand depending on whether or not your business is a registered company.

Digital records are expected to be kept up to date at least quarterly. It is important to note that businesses that currently submit their quarterly/monthly VAT returns online will have their online accounts closed by HMRC on 31 October 2022. This means that they will have to start using a MTDVAT software from 1 November 2022. However, this rule does not affect businesses that submit their VAT returns annually. The rule will become applicable to this group of businesses from 15 May 2023.

Where a business does not change to MTD VAT by 1 November 2022 they will be subject to a penalty. A penalty is also charged where a business does not use an approved/compatible software. Penalties could be up to £400 per return.

The new Vat penalty system will not take effect until 1 January 2023

There are exemptions for businesses where the individuals involved cannot practically use or have access to a computer/internet in order to file their returns.

The list of free software approved by HMRC (listed on .gov website) and available to use by businesses for MTD for VAT are as follows:

1. https://anna.money/free-tools/vat-filing/

2. https://gofile.co.uk/

3. https://www.adminsoftware.biz/

4. https://usebx.com/

5. https://www.vat.direct/

6. https://www.cmkmtd.com/home

7. https://easymtdvat.com/

8. https://www.fsb.org.uk/join-us/membership/fsb-member-benefits/making-tax-digital.html

9. https://www.mtdsorted.co.uk/?utm_source=hmrc_mtd_software&utm_medium=referral&utm_campaign=hmrc_mtd_software

10. https://app.portico.openanswers.co.uk/#/

11. https://www.quickfile.co.uk/

12. https://vatify.pinion.services/

Contact us at Lokk Accountants if you require further information.