If your enterprise is registered for VAT, you’ve most likely heard all about Making Tax Digital (MTD), and MTD for VAT specifically.
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 companies. This contains companies which are 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 supplies 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 reap the benefits of the newest applied sciences.
On the identical time, your total accounting admin workload is diminished.
On this article we take a look at tips on how to register for MTD for VAT in the event you’re new to all of it.
Right here’s what we cowl:
The way to register for a VAT account and submit a VAT Return on-line
If the taxable turnover of your enterprise is underneath the VAT threshold and also you’ve not already registered voluntarily for VAT, now is perhaps the time.
Registering means you possibly can reclaim VAT on stuff 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 purpose of Making Tax Digital for VAT is to simplify VAT accounting. So in the event you’ve been delay beforehand by the admin necessities of VAT accounting, it’s an amazing alternative.
You may 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 enterprise (in the event you don’t have already got one).
When you’ve registered for VAT, you’ll be despatched your VAT quantity that it is best to then quote in your VAT invoices.
You must begin accounting for VAT from the date that HMRC registers you.
After you have your VAT quantity, you may also 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 should utilize accounting software to submit your VAT Return to HMRC. And that’ll save time as you gained’t need to enter numbers in HMRC’s on-line service.
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 handle you employ for your enterprise
- The Authorities Gateway ID you employ for the enterprise
- Your VAT registration quantity
- Your newest VAT Return
- Your Nationwide Insurance coverage quantity in the event you’re a sole dealer
- Your organization registration quantity and Distinctive Taxpayer Reference (UTR) if registering a restricted firm.
The way to register for MTD for VAT
You should select the software program you propose 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 knowledge talked about earlier.
There are limitations on when you possibly can enroll – this stops you by accident making a double fee on 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 must 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 understand your enroll particulars, as offered by HMRC.
Subsequently, activation gained’t be computerized. Communicate to your software program vendor in the event you’re not sure 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 data digitally and use software program on 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.
The way to ask to be digitally exempt from MTD for VAT
It’s not doable to decide out of MTD for VAT.
Nonetheless, 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, “some other cause” which means it’s not “fairly 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 perhaps thought-about exempt.
- Non secular beliefs are incompatible with the necessities of MTD for VAT. That is usually 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 scenario and prepare different measures.
It’s essential to notice that if HMRC believes exemption isn’t applicable, it could provide digital help to assist your enterprise get on-line assist.
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.
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. Sometimes, that is the date on which you make the request.
As much as that date, it is best to proceed to look at VAT necessities.
You’ll must submit a last VAT Return for the interval as much as the cancellation date.
This should account for inventory and property you might have on the cancellation date in the event you might reclaim VAT once you purchased them, and if the whole VAT due is over £1,000.
Ultimate 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 enterprise.
And through the use of 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 concerning the necessities – they may also help you study processes in your enterprise to see what must be tailored.
Editor’s be aware: This text was first printed in September 2021 and has been up to date for relevance.