How to register for Making Tax Digital for VAT

Did you know the way you file your VAT Returns for your VAT-registered company has adjusted?

By legislation, you want to indication up to Earning Tax Electronic (MTD) and are required to use MTD-appropriate software for retaining VAT data and filing VAT Returns.

And with VAT Return filing deadlines on the horizon, you will need to make absolutely sure you’re complying with all specifications.

After all, you really don’t want to close up with a possible good for not following the regulations, right?

Moreover, from 1 November 2022, you simply cannot use your current VAT on-line account to file quarterly or regular monthly VAT Returns (far more details on that below).

Is this all news to you?

Really do not despair, we’re here to assistance you with Generating Tax Digital for VAT.

In this posting, we appear at how to sign-up for MTD for VAT if you are new to it all.

Here’s what we cover:

Overview of Generating Tax Electronic for VAT

If your enterprise is registered for VAT, you’ve probably listened to all about Creating Tax Digital (MTD), and MTD for VAT in certain.

Launched in April 2019, it afflicted all VAT-registered enterprises around the VAT threshold (at this time £85,000).

But now, MTD for VAT applies to all VAT-registered businesses. This includes companies that are voluntarily registered for VAT and below the threshold.

They should store their VAT accounting documents digitally and use appropriate software package for their VAT accounting.

MTD for VAT supplies an prospect to revolutionise your accounting.

By switching to computer software, or updating your present-day software to be compliant, you can both of those modernise and get edge of the most up-to-date systems.

At the similar time, your general accounting admin workload is minimized.

Can I merely carry on distributing my VAT Returns as regular?

Sadly not, no.

From 1 November 2022, you won’t be in a position to use your present VAT on the net account to file quarterly or regular VAT Returns.

(If you file once-a-year VAT Returns, HMRC claims you can use your VAT online account until finally 15 May well 2023.)

The only way you are going to be in a position to post your VAT Returns is by signing up to MTD for VAT and making use of MTD suitable program – and you need to commence carrying out that now or you could be penalised by HMRC.

HMRC is sending letters to companies now that require to start out subsequent the MTD for VAT policies, so if you’ve not signed up your VAT registered enterprise for Generating Tax Electronic nevertheless, you will probably get a single.

And relatively than waiting around till November 2022 (or May 2023), it’s most effective to make the improve to your processes now. That starts with registering for MTD for VAT.

A lot more particulars on that below…

How to sign-up for a VAT account and post a VAT Return on the net

If the taxable turnover of your enterprise is below the VAT threshold and you have not previously registered voluntarily for VAT, now may well be the time.

Registering signifies you can reclaim VAT on matters you invest in for your organization.

A lot of companies sign-up voluntarily mainly because it would make their procedure show up far more experienced – specially when providing to other corporations.

The objective of Making Tax Digital for VAT is to simplify VAT accounting. So if you’ve been put off previously by the admin specifications of VAT accounting, it’s a great prospect.

You can sign up for VAT on-line, or your accountant can do it for you. If executing it oneself, you will will need to generate a Federal government Gateway account for your company (if you really do not previously have one particular).

At the time you have registered for VAT, you will be sent your VAT number that you should really then quotation on your VAT invoices.

You should commence accounting for VAT from the day that HMRC registers you.

Once you have your VAT variety, you can also submit a VAT Return on-line when the time arrives.

You can use accounting computer software to post your VAT Return to HMRC.

What you have to have to sign-up for MTD for VAT

To register for MTD for VAT, you’ll have to have gather with each other a number of bits of information:

• The e-mail handle you use for your organization
• The Government Gateway ID you use for the business enterprise
• Your VAT registration selection
• Your most recent VAT Return
• Your Countrywide Coverage quantity if you’re a sole trader
• Your firm registration quantity and Unique Taxpayer Reference (UTR) if registering a confined business.

How to sign-up for MTD for VAT

You require to select the application you intend to use right before signing up for MTD for VAT.

You can sign up for MTD for VAT by clicking sign up for MTD at the Gov.uk web site, then remedy the concerns, which will include supplying the information outlined before.

There are limitations on when you can sign up – this stops you accidentally generating a double payment for your present-day return.

You should really not indication up a lot less than 7 days right before your VAT Return is due, or significantly less than 5 times soon after your VAT Return is due.

You really should get confirmation from HMRC within 3 times.

The MTD for VAT characteristics in your accounting software will need to be activated the moment you know your sign up specifics, as provided by HMRC.

Therefore, activation will not be computerized. Converse to your application seller if you are not sure of what is necessary.

Can my accountant sign up for MTD for VAT for me?

Sure. Just request them to do so on your behalf.

But bear in mind that this does not necessarily mean you can disregard MTD for VAT’s requirements.

You however need to store your key VAT accounting information digitally and use software package for your VAT accounting – even if your accountant then calculates your VAT bill and submits the VAT Return on your behalf.

Your accountant may talk to that you hyperlink your accounting software with theirs.

How to talk to to be digitally exempt from MTD for VAT

It’s not achievable to decide out of MTD for VAT.

Nevertheless, some firms have real motives why they’re not able to comply with Building Tax Digital.

These contain the adhering to:

• Explanations of age, disability, remoteness of place or, in HMRC’s terms, “any other reason” that suggests it’s not “reasonably practicable” for the small business owner to use electronic tools to preserve enterprise data or post returns. For example, a enterprise with no an world wide web relationship simply because it’s on an island that is off the grid may well be viewed as exempt.
• Spiritual beliefs are incompatible with the needs of MTD for VAT. This is typically that the men and women operating the enterprise are not able to use computers simply because of their beliefs.

To implement for exemption, connect with HMRC’s VAT helpline to examine the problem and set up alternate measures.

It’s vital to take note that if HMRC thinks exemption is not ideal, it may supply digital support to assistance your company get on line assist.

Can I deregister from VAT to keep away from MTD for VAT?

Any VAT-registered company can request to terminate their VAT registration with HMRC if they are not eligible any more or if taxable profits drop underneath the £83,000 deregistration threshold.

VAT registration can be cancelled on line, or you can you fill in and then article a VAT7 variety to HMRC.

HMRC suggests it can take a few months for the cancellation to be verified.

This will include confirmation of the cancellation day, which you will already have established with HMRC. Typically, this is the day on which you make the request.

Up to that day, you must carry on to notice VAT specifications.

You are going to require to submit a closing VAT Return for the time period up to the cancellation date.

This have to account for inventory and assets you have at the cancellation date if you could reclaim VAT when you bought them, and if the whole VAT owing is around £1,000.

Closing thoughts on MTD for VAT

Now you know how to register for Creating Tax Digital for VAT, you can choose the actions to do so for your business.

And by making use of application to deal with your VAT accounting, you are going to be in a position to revolutionise your procedures.

Will need extra support with MTD for VAT?

Speak to your accountant about the requirements – they can assist you analyze procedures in your business to see what requirements to be tailored.

Editor’s notice: This write-up was 1st revealed in September 2021 and has been up-to-date for relevance.