We understand that in this current climate it can be difficult to keep on top of all the changes which are being made by the government and HMRC. So we thought we would tell you about what you need to know about the changes in VAT returns which are approaching us.
Businesses with a turnover exceeding £85,000 must be VAT registered and should already be complying with MTD rules. Businesses below this threshold can voluntarily register for VAT. The advantage of this being that you can reclaim the VAT on purchases. From April 2021 the way in which you submit VAT returns is changing.
Currently if you’re only voluntarily registered for VAT then you don’t have to comply with Making Tax Digital (MTD) rules but this is about to change.
From April 2021 HMRC are removing the VAT XML method (the method which you would use which doesn’t comply with MTD) of submitting a VAT return. Basically if you are using software which isn’t supported by HMRC’s MTD then you will no longer be able to use this software to submit your return.
From this date you will need to either comply with the rules of MTD or submit your VAT return via HMRC’s portal using your Business Tax Account and your VAT online account.
If you don’t comply with the rules of MTD and you are VAT registered you will be liable for penalty fines from April 2021. For more information visit GOV.UK
As of April 2022 you will need to comply with the rules of MTD regardless as from this date it will be mandatory. Until this date you can still submit your VAT return via HMRC’s portal but you will then still have the risk of making errors when keying in your VAT values.
If you are currently using Sage 50 Cloud Accounts or Sage Business Cloud Accounting then these platforms are compatible with MTD. If you are using older Sage software then you may need to upgrade to ensure that you are ready to comply with the transition of MTD.
For advice on MTD and Voluntary VAT submissions and your Sage software please get in touch.
Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.