Making Tax Digital for VAT mandatory from 1 April 2022

19 January 2022| CATEGORIES: Making Tax Digital| TAGS: Making Tax Digital, New HMRC rules, VAT

In July 2020 the government announced that Making Tax Digital for VAT (MTDfV) would be extended to all VAT registered businesses with effect from their first VAT period starting on or after 1 April 2022.  MTDfV is part of the overall digitalisation of UK Tax. See HMRC’s Extension of Making Tax Digital for VAT policy paper for further information.

Background

Businesses with taxable turnover above £85,000 have been required to follow MTDfV since April 2019.  As of December 2021, nearly 1.6 million taxpayers had joined MTDfV with more than 11 million returns successfully submitted. Around a third of VAT registered businesses with taxable turnover below £85,000 have voluntarily signed up to MTDfV ahead of April 2022.

HMRC urges VAT registered businesses to sign up

HMRC has recently issued a reminder for VAT registered businesses to take steps to prepare for MTDfV before it becomes mandatory.

Joanna Rowland, HMRC’s Director General for Transformation, said:

“Making Tax Digital is fundamental to the delivery of a trusted and modern tax system, making it easier for businesses to get their tax right and supporting the UK to go digital.

By signing up for Making Tax Digital, we expect most businesses to experience long-term benefits, including reduced errors and time saved in managing their tax affairs.

We encourage businesses to explore digital record-keeping for their VAT affairs and use this time to choose the right software to support their business needs.”

Agents can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. Those who do not join may be charged a penalty for failure to do so.

Please get in touch if you need assistance with meeting the MTDfV requirements.