As you are probably aware, complying with Making Tax Digital (MTD) has been compulsory for most VAT registered businesses since April 2019. MTD was introduced in order to make the UK tax system as efficient as possible and to eliminate human error, which was costing the government billions of pounds each year.
The next phase of MTD is coming into effect from 1st April 2022. All remaining VAT registered businesses who don’t currently fall under the legislation to comply with MTD (i.e. who fall under the VAT threshold of £85,000) will now have to sign up for it.
If this applies to your business then you will need to make sure your software is compatible with MTD and that you are prepared. You will need to ensure that you are keeping digital copies of all of your records and your VAT return will need to be submitted to HMRC via the appropriate software.
If you have applied for an exemption and it has been accepted then this will still apply after 1st April 2022.
What action do I need to take?
If you are currently using spreadsheets to keep track of your bookkeeping yourself in order to keep costs to a minimum, then you will have to either invest in a bookkeeper who will manage this for you, or you will need to update your system. You will require digital software to store and submit all your information in order to comply with MTD.
You need to be aware that not all digital software is MTD compliant. Before investing in software you can check it’s capability here.
Luckily, if you are currently using Sage Cloud software then you are already using compatible software. You just need to sign up with HMRC by April this year. You will then need to connect your Sage software to HMRC in preparation before submitting your VAT return.
If you’re needing to make the step towards your new compatible software, or you just need a helping hand with your existing software in preparation for MTD then please get in touch. We have software demo’s at the ready and training packages to guide you through the process.
For the month of February we have an incredible offer on Sage Business Cloud Accounting (SBCA). Get SBCA Standard for just £10 pcm for the first 12-months (normal RRP £24 pcm) with free migration from Sage 50 too! (Prices excl. VAT).
“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.”