How to register for Making Tax Digital for VAT – Sage Advice United Kingdom

Did you understand how you file your VAT Returns to your VAT-registered enterprise has modified?

By regulation, it is advisable sign up to Making Tax Digital (MTD) and are required to make use of MTD-compatible software for retaining VAT information and submitting VAT Returns.

And with VAT Return filing deadlines on the horizon, it is advisable be sure to’re complying with all necessities.

In any case, you don’t wish to find yourself with a possible fine for not following the foundations, proper?

Plus, from 1 November 2022, you possibly can’t use your existing VAT online account to file quarterly or month-to-month VAT Returns (extra particulars on that beneath).

Is that this all information to you?

Don’t despair, we’re right here that can assist you with Making Tax Digital for VAT.

On this article, we have a look at the right way to register for MTD for VAT when you’re new to all of it.

Right here’s what we cowl:

Overview of Making Tax Digital for VAT

If your small business is registered for VAT, you’ve in all probability heard all about Making Tax Digital (MTD), and MTD for VAT particularly.

Launched in April 2019, it affected all VAT-registered companies over the VAT threshold (at present £85,000).

However now, MTD for VAT applies to all VAT-registered businesses. This contains companies which can be voluntarily registered for VAT and underneath the brink.

They have to retailer their VAT accounting information digitally and use compatible software for their VAT accounting.

MTD for VAT gives a chance to revolutionise your accounting.

By switching to software program, or updating your present software program to be compliant, you possibly can each modernise and make the most of the newest applied sciences.

On the identical time, your general accounting admin workload is diminished.

Can I merely keep it up submitting my VAT Returns as regular?

Sadly not, no.

From 1 November 2022, you received’t be capable of use your existing VAT online account to file quarterly or month-to-month VAT Returns.

(In the event you file annual VAT Returns, HMRC says you should utilize your VAT on-line account till 15 Could 2023.)

The one approach you’ll be capable of submit your VAT Returns is by signing as much as MTD for VAT and utilizing MTD appropriate software program – and it is advisable begin doing that now or you might be penalised by HMRC.

HMRC is sending letters to businesses now that want to begin following the MTD for VAT guidelines, so when you’ve not signed up your VAT registered enterprise for Making Tax Digital but, you’ll possible obtain one.

And fairly than ready till November 2022 (or Could 2023), it’s greatest to make the change to your processes now. That begins with registering for MTD for VAT.

Extra particulars on that beneath…

register for a VAT account and submit a VAT Return on-line

If the taxable turnover of your small business is underneath the VAT threshold and also you’ve not already registered voluntarily for VAT, now is likely to be the time.

Registering means you possibly can reclaim VAT on belongings you buy for your small business.

Many companies register voluntarily as a result of it makes their operation seem extra skilled – particularly when promoting to different companies.

The aim of Making Tax Digital for VAT is to simplify VAT accounting. So when you’ve been postpone beforehand by the admin necessities of VAT accounting, it’s an incredible alternative.

You’ll be able to register for VAT online, or your accountant can do it for you. If doing it your self, you’ll must create a Authorities Gateway account for your small business (when you don’t have already got one).

When you’ve registered for VAT, you’ll be despatched your VAT quantity that it’s best to then quote in your VAT invoices.

It’s best to begin accounting for VAT from the date that HMRC registers you.

Upon getting your VAT quantity, you may also submit a VAT Return on-line when the time comes.

You need to use accounting software to submit your VAT Return to HMRC.

What it is advisable register for MTD for VAT

To register for MTD for VAT, you’ll want collect collectively a number of bits of knowledge:

• The e-mail tackle you employ for your small business
• The Authorities Gateway ID you employ for the enterprise
• Your VAT registration quantity
• Your newest VAT Return
• Your Nationwide Insurance coverage quantity when you’re a sole dealer
• Your organization registration quantity and Distinctive Taxpayer Reference (UTR) if registering a restricted firm.

register for MTD for VAT

You might want to select the software program you propose to make use of earlier than signing up for MTD for VAT.

You’ll be able to register for MTD for VAT by clicking register for MTD at the Gov.uk website, then reply the questions, which is able to contain offering the knowledge talked about earlier.

There are limitations on when you possibly can enroll – this stops you unintentionally making a double fee to your present return.

You shouldn’t enroll lower than seven days earlier than your VAT Return is due, or lower than 5 days after your VAT Return is due.

It’s best to obtain affirmation from HMRC inside three days.

The MTD for VAT options in your accounting software program have to be activated as soon as your enroll particulars, as offered by HMRC.

Due to this fact, activation received’t be computerized. Communicate to your software program vendor when you’re uncertain of what’s required.

Can my accountant register for MTD for VAT for me?

Sure. Simply ask them to take action in your behalf.

However keep in mind that this doesn’t imply you possibly can ignore MTD for VAT’s necessities.

You continue to must retailer your key VAT accounting information digitally and use software program to your VAT accounting – even when your accountant then calculates your VAT invoice and submits the VAT Return in your behalf.

Your accountant could ask that you just hyperlink your accounting software program with theirs.

ask to be digitally exempt from MTD for VAT

It’s not potential to decide out of MTD for VAT.

Nevertheless, some companies have real explanation why they’re unable to adjust to Making Tax Digital.

These embody the next:

• Causes of age, incapacity, remoteness of location or, in HMRC’s phrases, “every other purpose” which means it’s not “fairly practicable” for the enterprise proprietor to make use of digital instruments to maintain enterprise information or submit returns. For instance, a enterprise with out an web connection as a result of it’s on an island that’s off the grid is likely to be thought of exempt.
• Non secular beliefs are incompatible with the necessities of MTD for VAT. That is sometimes that the people operating the enterprise are unable to make use of computer systems due to their beliefs.

To use for exemption, name HMRC’s VAT helpline to debate the state of affairs and organize various measures.

It’s vital to notice that if HMRC believes exemption isn’t acceptable, it could provide digital help to assist your small business get on-line help.

Can I deregister from VAT to keep away from MTD for VAT?

Any VAT-registered enterprise can ask to cancel their VAT registration with HMRC in the event that they’re not eligible anymore or if taxable gross sales drop beneath the £83,000 deregistration threshold.

VAT registration could be cancelled online, or you possibly can you fill in after which submit a VAT7 type to HMRC.

HMRC says it takes three weeks for the cancellation to be confirmed.

This may embody affirmation of the cancellation date, which you’ll have already got set with HMRC. Sometimes, that is the date on which you make the request.

As much as that date, it’s best to proceed to watch VAT necessities.

You’ll must submit a closing VAT Return for the interval as much as the cancellation date.

This should account for inventory and belongings you’ve on the cancellation date when you may reclaim VAT while you purchased them, and if the whole VAT due is over £1,000.

Remaining ideas on MTD for VAT

Now you understand how to register for Making Tax Digital for VAT, you possibly can take the steps to take action for your small business.

And through the use of software program to handle your VAT accounting, you’ll be capable of revolutionise your processes.

Want extra assist with MTD for VAT?

Communicate to your accountant concerning the necessities – they can assist you look at processes in your small business to see what must be tailored.

Editor’s notice: This text was first revealed in September 2021 and has been up to date for relevance.