01 Mar 2022
Making Tax Digital
There are now only a few weeks left before the final stage of Making Tax Digital for VAT begins in April this year.
Under the upcoming final phase, 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.
So far, hundreds and thousands of VAT registered businesses above the VAT threshold of £85,000 are complying with MTD, having invested time and money to bring their systems up to date with the compliance requirements.
Now many more businesses are likely to be caught out by the change, which will require smaller firms to use the latest MTD compliant cloud accounting software.
HMRC compatible software
It’s essential that you use the correct software to meet the new requirements. The software must be able to:
- 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
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.
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 as they prepare for MTD.
Article by - MJ Bushell