When did making tax digital for VAT become mandatory? You may have heard of the new system, but you are still not sure exactly what it is. It is a UK government initiative aimed at making tax administration more effective, efficient, and simple. Its main goal is to eliminate the need for tax returns and to make the process easier for both taxpayers and HM Revenue and Customs. Here are some benefits to making tax digital for VAT. Firstly, it’s important to understand the implications of Making Tax Digital for VAT. Failure to comply can result in penalties of up to 100% of the VAT due. In the case of VAT, it is not yet clear how the penalties will be applied in practice. HMRC expects software to have check functions so you can comply with the regulations.
The VAT notice 700/21 describes how VAT records should be kept. It also includes information on how to keep digital records for VAT. There are two phases of Making Tax Digital for VAT. Phase one came into effect on April 2019 and required businesses to submit their VAT Return electronically. However, due to COVID-19, phase two was delayed and will apply to VAT return periods starting on or after 1 April 2022.
In phase two, digital links must be created between source data and final figures. Businesses are encouraged to use software that supports MTD for VAT for their accounting needs. During the soft landing phase, HMRC will provide support and guidance to businesses preparing to make the change. While it may not be feasible to go digital overnight, the benefits are huge. By establishing digital links to VAT accounting records, small businesses can make their taxes more efficient and save money in the process. Make sure you get all the details of your VAT returns before you start setting up for making tax digital for VAT. And, be sure to check with your accountant about the requirements for making tax digital. If you don’t already have an accountant give a call to Alexander Ene . They are accountants in north London with extensive knowledge of MTD for VAT. Another feature of MTD for VAT is support for multiple VAT registrations. This will help you report your VAT payments as a VAT group.
The process of making VAT digital is easy, and the software supports multiple VAT registrations and company-level reporting. However, you must sign up for the service before the deadline to make your transactions digital. Make sure you get a Step by Step Guide for Businesses for more information. If you’re unsure of whether MTD is right for your business, check out the guide for your industry. MTD for VAT rules apply to all businesses that are VAT registered. Businesses with a taxable turnover of Â£85,000 must comply with the rules by April 2022. It is important to note that if you’re not compliant, you may be liable to pay penalties. However, you can still sign up for the scheme if you’re exempt from VAT.
Further information about Alexander Ene and the new Making Tax Digital For VAT Setup service can be discovered at https://www.alexander-ene.co.uk