Date09 Mar 2022
CategoryTax, VAT & Indirect Tax
From 1 April 2022, businesses registered for UK VAT on a voluntary basis are required to comply with MTD procedures. Our team have pulled together details on who will be affected and what the new procedures are on how to ensure compliance before the deadline.
VAT-registered businesses, individuals and charities that are registered for VAT on a voluntary basis (typically those with turnover of less than £85,000) that are not already registered for MTD will be required to apply and follow the MTD rules from 1 April 2022.
From 1 April 2022 all UK VAT registered businesses must keep and maintain VAT records digitally in “a compatible software package that allows you to keep digital records and submit VAT Returns” or use “bridging software to connect non-compatible software (like spreadsheets) to HMRC systems”.
This requirement is compulsory for all VAT periods beginning on or after 1 April 2022.
Records included under this requirement include sales and purchase invoices with VAT, however, accounting records not specific to VAT returns are not included.
The data that must be stored digitally includes:
If more than one software package is used the packages need to be linked digitally. The links can involve:
Digital should NOT involve:
Penalties and interest will arise for late, inaccurate or non-compliant returns with additional penalties levied for repetitive mistakes or false information. Penalties can be up to 100% of the VAT due with interest charged at 3% of the amount owing.
If you are affected by this change you must take action now to avoid penalties from HMRC. Our expert team are on hand to help clients comply from 1 April 2022 and can discuss options and solutions that can be implemented now ahead of the deadline.
There are exemptions from MTD for those that qualify by reason of age, disability, location or religion however specific conditions must be met. Businesses that do not want to move their financial records to a new MTD compliant accounting package could use Azets MTD for VAT bridging tool. This can be found in our Azets CoZone client portal and can be used to complete and submit VAT returns to HMRC.
If you would like more information on MTD for VAT and solutions, or need assistance with your MTD obligations, please contact your usual Azets advisor.