If your enterprise 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 the moment £85,000).

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

They need to retailer their VAT accounting data digitally and use compatible software for their VAT accounting.

MTD for VAT offers a possibility 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 most recent applied sciences.

On the similar time, your general accounting admin workload is lowered.

On this article we take a look at how you can register for MTD for VAT if you happen to’re new to all of it.

Right here’s what we cowl:

If the taxable turnover of your enterprise 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 enterprise.

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 if you happen to’ve been delay beforehand by the admin necessities of VAT accounting, it’s a terrific alternative.

You may register for VAT online, or your accountant can do it for you. If doing it your self, you’ll have to create a Authorities Gateway account for your enterprise (if you happen to 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.

You need to begin accounting for VAT from the date that HMRC registers you.

After you have your VAT quantity, you can even submit a VAT Return on-line when the time comes. To do that, you’ll want to join a VAT on-line account.

That is finished by logging into the Authorities Gateway account you created whereas signing up for VAT, after which choice the choice headed VAT Submit Returns.

You need to use accounting software to submit your VAT Return to HMRC. And that’ll save time as you gained’t must enter numbers in HMRC’s on-line service.

To register for MTD for VAT, you’ll want collect collectively just a few bits of data:

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

You should select the software program you plan to make use of earlier than signing up for MTD for VAT.

You may 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 data talked about earlier.

There are limitations on when you possibly can enroll – this stops you by chance making a double cost 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.

You need 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 you already know your enroll particulars, as offered by HMRC.

Subsequently, activation gained’t be computerized. Communicate to your software program vendor if you happen to’re not sure of what’s required.

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 have to retailer your key VAT accounting data 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.

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

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

These embrace the next:

  • Causes of age, incapacity, remoteness of location or, in HMRC’s phrases, “another motive” which means it’s not “moderately practicable” for the enterprise proprietor to make use of digital instruments to maintain enterprise data 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-about exempt.
  • Non secular beliefs are incompatible with the necessities of MTD for VAT. That is sometimes that the people working 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 scenario and organize various measures.

It’s vital to notice that if HMRC believes exemption isn’t applicable, it might provide digital help to assist your enterprise get on-line help.

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 will be cancelled online, or you possibly can you fill in after which publish a VAT7 kind to HMRC.

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

It will embrace affirmation of the cancellation date, which you’ll have already got set with HMRC. Usually, 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 have to submit a last VAT Return for the interval as much as the cancellation date.

This should account for inventory and belongings you might have on the cancellation date if you happen to may reclaim VAT once you purchased them, and if the overall VAT due is over £1,000.

Now you know the way to register for Making Tax Digital for VAT, you possibly can take the steps to take action for your enterprise.

And by utilizing software program to handle your VAT accounting, you’ll be capable to revolutionise your processes.

Want extra assist with MTD for VAT?

Communicate to your accountant in regards to the necessities – they may help you study processes in your enterprise to see what must be tailored.

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