Since 1 April 2019, VAT-registered businesses in the UK above the registration threshold (currently £85,000) need to submit their VAT returns using “functional compatible software” and store their VAT accounting records digitally.
This is part of HMRC’s ongoing Making Tax Digital (MTD) plans.
But as of 1 April 2022, all VAT-registered businesses will be required to use MTD for their VAT accounting.
This includes around 700,000 businesses that are registered for VAT but are below the VAT threshold, so may not have considered MTD for VAT before now.
With this deadline approaching, SAGE have updated their Making Tax Digital checklist to help all businesses get up to speed with MTD for VAT if they find themselves needing to.
The key thing to know is that it will no longer be possible to submit VAT returns manually via HMRC’s website for your first full VAT period following April 2022. It must be done via software.
This is a big change and businesses need to prepare now for their first Making Tax Digital VAT return submission.
Startups have produced a list of the best free accounting software for small businesses in 2021