If you are voluntarily registered for VAT you will now need to change the way you submit VAT returns. This came into effect from April this year (2021).
Preparing for MTD
By April 2022 all businesses registered for VAT will need to be registered for MTD. This will be a legal requirement. The best way to prepare for this is to register ASAP so that there are no surprises when the time comes. Being organised ahead of time means that when the legacy VAT submission method is deactivated it won’t affect your business. It also gives you time to get your software in order to make the transition as seamless as possible.
What are the benefits of registering early?
- It gives you the chance to better manage the process
- Takes the stress away
- The support from HMRC and your software provider will be more efficient than leaving it until the last minute when everyone is doing the same
Why do I need compatible software?
HMRC have introduced MTD (Making Tax Digital) in order to streamline their processes and cut out mistakes due to human error. Under the MTD rules you must now have compatible software in order to submit your VAT return.
HMRC decommissioned the current VAT XML channel on 8th April 2021 this year. If your accounting software relied upon this in order to submit VAT returns then I’m afraid upgrades will be required in order to comply with MTD.
Sage 50cloud Accounts and Sage Business Cloud Accounting software are both compatible with MTD. If you would like some support or would like a chat to discuss your Sage software then please give us a call.
Can I opt out of MTD?
MTD is a legal requirement and once you register there’s no backing out. Unless your business falls under the VAT threshold and no longer needs to be registered for VAT, then your business is in it for the long haul.
You can still continue to submit your VAT return using HMRC’s portal by logging into your Business Tax Account or VAT Online Account but you will no longer be able to do so once MTD becomes mandatory from April 2024.
It’s always difficult for businesses when new legislation is introduced but if you make the transition early then the impact on your business will not be as great. Sage Accounts Solutions are here to support you through the process, so please do not hesitate to get in touch.
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