Making Tax Digital is extended to all VAT registered businessesNikki
Following the successful introduction of Making Tax Digital in April 2019, the requirements will extend to cover smaller VAT-registered businesses in April 2022. These changes will apply to approximately 1.1 million businesses with a taxable turnover below the current VAT threshold. These businesses are not currently required to use MTD for their VAT reporting and record keeping obligations.
Around a quarter of VAT registered businesses below the threshold have voluntarily chosen to join MTD already, proof that managing tax digitally works for every business.
Why is MTD being extended?
Making tax Digital isn’t just about filing tax returns, it also gives businesses guidance for storing VAT information digitally – known as digital record keeping. Organising records in this way has proven advantages for businesses of every size.
Since the introduction of MTD, businesses have also reported additional benefits linked to the digitalsation of VAT payments. These are
- Greater accuracy – automated reporting through software takes away the chance for human error.
- A reduction in the time spent on admin giving, freeing up time focus on other business opportunities.
- Makes it easier to ‘get tax right and harder to get wrong’
- It is a modern, digital approach to managing tax. With nearly every other element of running a business can be performed using software from banking to paying invoices.
To comply with MTD regulations you’ll need to look at the processes surrounding your VAT Return to make sure they are MTD compliant too. Processes that need to be digitally recorded include generating invoices, creating sales orders, keeping track of expenses, and any other areas that you factor into your accounting processes.
MTD Bridging Software
To prepare for making tax digital, you’ll need to use “functional compatible software’ and store your company VAT accounting records digitally. The software you use will need to integrate with HMRC’s API systems. You can do this by using a bridging software like our MTD module or subscribing to Sage 50cloud Accounts which is equipped to meet MTD requirements.
While this integrates seamlessly into Sage 50 Accounts software, it also works with a range of other software too. Using a bridging tool makes it easy to submit your VAT returns and to comply with MTD regulations.
Preparing for MTD
New to Making Tax Digital? Use our MTD checklist to help you prepare your business and accounting processes. For help or guidance preparing your software or using the MTD bridging tool, call our team on 0121 323 2304 or email us email@example.com.