Making Tax Digital for VAT is a government initiative that was introduced in 2019 with the aim of streamlining the VAT returns and registration process, making it digital and thereby easier for millions of business owners across the country. But if MTD for VAT is something you’re not familiar with and you’d like to explore further, we take a look at some of the requirements and prerequisites for when you sign up to Making Tax Digital.
Registering for MTD
Registering for MTD has been designed to simplify the process of VAT returns and registration for multiple business owners. Here’s some important information you should know.
Important dates
Businesses that are VAT registered and which fall above the VAT threshold of £85,000 are required to register for MTD. Businesses that do not fall above this threshold can voluntarily register. But this has since changed and starting in April 2022, all VAT-registered businesses are required to register for MTD regardless of the threshold. Income tax and corporation tax will slowly be introduced for MTD in the future as well.
How to register for MTD and its prerequisites
Before you start registering for MTD, you need to have a couple of details in place to help you get started. These include:
- your business email address,
- your business’ Government Gateway ID,
- your VAT registration number,
- your latest VAT return,
- your National Insurance number (for sole traders)
- and the company registration and Unique Taxpayer Reference (UTR) (for limited companies).
Once all this is in place, you can get started. Firstly, sign in to your Government Gateway account. Then you’ll need to confirm your business type and enter the relevant tax references. You’ll also need to select the method of communication with the HMRC. Once done, you can submit your application and you should hear from HMRC within three business days.
Who can register you for MTD VAT?
You can either register yourself for MTD VAT or you can ask your accountant to help you. However, if you choose the latter option, you’ll need to make sure you still have digital records of your income and expenses and you’ll need to be digitally linked to your accountant’s software. Once this link is established, they can file your VAT returns for you.
Exemptions
For various reasons, some business owners may need to request exemptions from MTD VAT. Such cases may include exemptions on the grounds of religious reasons, lack of computer literacy or usage, or a location that is considered off-grid.
VAT deregistration
Using a VAT7 form, you can request to be deregistered from VAT if you are no longer eligible or if your business’ taxable sales fall below the £83,000 deregistration threshold.
Conclusion
If going digital seems a bit overwhelming and you’re not sure how to create a digital link with your accountant or whether the software you use is compatible with the HMRC’s system, you can trust our professional and reliable tax accountants in London. We’ll make sure your VAT returns are accurately prepared and submitted the right way so that you can rest assured that your business’ obligations will be fully met.