What the HMRC Making Tax Digital for VAT letters mean for your business

Otto Eovaldi


Have you gained a letter from HMRC about Generating Tax Digital for VAT? If you have, you are not by yourself.

HMRC is sending a sequence of Building Tax Digital (MTD) for VAT letters to qualified VAT-registered corporations.

This is to allow them know that the way VAT information are stored and VAT Returns are submitted has modified, and that they need to have to get started subsequent MTD for VAT.

Even so, if your enterprise hasn’t acquired a letter however, which is not to say it will not.

Go through this post to find out about the positive aspects of Creating Tax Digital, what HMRC’s letters imply for you, and what measures you must choose future.

Here’s what we protect:

Why Making Tax Digital will profit your company

Generating Tax Digital is a person of the most critical variations to British isles firms ever.

Not only does it help to reduce faults when it will come to working with enterprise admin, it boosts efficiency for your corporation as well.

Spending less time on admin so you can target on your business is critical – by relocating to digital accounting, organizations can save an typical of £17,000/27.6 days per calendar year, according to research by Sage.

Why has my enterprise acquired a letter from HMRC?

If your company has been given one particular of the MTD for VAT letters from HMRC, it’s since you need to have to commence trying to keep electronic data and modify the way you post your VAT.

The contents of the letters supply you with a collection of steps that will need to be taken so your company is pursuing the MTD for VAT rules.

In the terms of one particular of the letters from HMRC: “All VAT-registered organizations, no matter of taxable turnover, will need to have to begin working with MTD for VAT return intervals commencing on or just after 1 April 2022.”

What do the letters (and Producing Tax Electronic) mean for me?

It means that due to the fact 1 April 2022, the way all VAT-registered corporations keep their documents and submit VAT returns improved.

Now, HMRC necessitates your business enterprise to continue to keep information digitally, even though the submission of VAT information requires to be completed by way of MTD compatible computer software or bridging software program.

What transpires if I’ve not acquired a letter from HMRC?

HMRC will be sending out a lot more letters to enterprises, so there’s a opportunity you will receive a person if your business is VAT registered and you have not presently signed up for MTD for VAT.

On the other hand, you really don’t have to wait around to get a letter from HMRC to commence working with MTD for VAT – you can indicator up for it now.

What do the HMRC Creating Tax Digital letters say?

The letters get started by telling you that you will need to consider action to get completely ready for Building Tax Digital.

They condition that all VAT-registered corporations want to signal up for MTD for VAT, irrespective of taxable turnover.

Upcoming, they include a series of techniques for you to just take (the letters go into more depth):

  • You want MTD appropriate software program or bridging program
  • You should use your software package to maintain your digital documents
  • You really should go to the Gov.uk web page so you can indicator up for MTD for VAT
  • You have to let your software package to work with MTD, then you can start submitting your VAT Returns applying MTD.

The letters also alert that if you never start using MTD before your to start with MTD for VAT return deadline (your certain deadline really should be on your letter), there is a likelihood you will be penalised.

Additionally, there’s a reference to MTD exemptions (locate out extra at Gov.british isles), and a take note pointing out that if you use an accountant or agent to support you control your business taxes, they can support your shift to MTD for VAT.

Crucial dates to be mindful of

Building Tax Electronic is mandated for all VAT-registered enterprises as of 1 April 2022, but what other dates should you continue to keep in mind?

Nicely, that depends on when your first comprehensive VAT interval commences on or immediately after this date.

If you are a company with the regular quarterly VAT accounting durations, you must preserve electronic information and submit your VAT Return via MTD from the pursuing begin dates:

  • 1 April 2022: If the prior VAT quarter finished on 31 March 2022.
  • 1 Might 2022: If the past VAT quarter ended on 30 April 2022.
  • 1 June 2022: If the preceding VAT quarter ended on 31 Could 2022.

The same logic applies to regular monthly and once-a-year VAT accounting intervals, so retain in mind when your very first entire VAT accounting periods starts.

And considering the fact that there’s nonetheless a need to file VAT Returns by one calendar month and 7 times, at the most up-to-date, this usually means the first VAT Returns for MTD for VAT ought to be filed by the subsequent:

  • 7 August 2022 for a VAT quarter beginning 1 April 2022.
  • 7 September 2022 for a VAT quarter commencing 1 May well 2022.
  • 7 October 2022 for a VAT quarter beginning 1 June 2022.

There are also deadlines to sign-up for MTD for VAT to retain in brain.  

If you now pay back by Immediate Debit, really do not indication up way too shut to the date your VAT Return is because of or you might fork out twice.

To steer clear of this, make sure you don’t sign up a lot less than:

  • Seven times right before your return is because of
  • Five days just after your return is because of

And if you never pay back by Immediate Debit, make certain you signal up at the very least three days before the because of day for your VAT Return.

Where you can get enable planning for MTD

To enable you with your preparations for Producing Tax Electronic, HMRC’s letters go over a several sources that will give you with the guidance necessary to make the go to MTD for VAT a clean a person.

They include basic facts on Creating Tax Digital and details on electronic document keeping (product sales and acquire information ought to be held digitally, even though invoices even now need to have to be retained for at minimum 6 many years).

In addition, at Sage, we’ve designed MTD Hub, which has solutions to inquiries you may have about MTD for VAT, and you can indicator up for a webinar to guidebook you along the way.

There’s also data to help you make absolutely sure you have MTD compatible computer software, so you can regulate and post your VAT Returns in the appropriate way.

And we’ve set jointly the subsequent MTD for VAT content, so you can make the go to all factors electronic a breeze:

Remaining thoughts on Making Tax Digital

Relocating to Generating Tax Digital for VAT might seem to be like a chore – one particular extra issue to get worried about, on prime of all of the other troubles you have to deal with with your enterprise.

However, it will make a serious difference to the way you control your business admin. In addition, getting clarity on your business funds and the tax you owe will necessarily mean you can regulate your funds additional proficiently.

The exact goes for preserving electronic documents – the days of browsing for paper files or filing them in a cabinet will be around.

Possessing straightforward entry to anything by using a couple of clicks of your computer or cellular mobile phone will imply you preserve time – and lower a ton of stress far too.


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