Making Tax Digital for VAT deadlines – Sage Recommendation United Kingdom


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Making Tax Digital for VAT deadlines – Sage Recommendation United Kingdom

In April 2022, Making Tax Digital (MTD) for VAT modified.

It now consists of considerably extra companies in comparison with earlier than.

Those that have voluntarily registered for VAT must comply with its tips.

This consists of companies beneath the £85,000 VAT registration threshold.

Eligible companies are going to have to grasp the significance and timeliness of MTD for VAT, and guarantee they meet the deadlines – together with registering on time.

Right here’s what we cowl:

Key dates to know for MTD for VAT

Your timeline for preparing for MTD for VAT

MTD for VAT deadlines: FAQs

Final thoughts on MTD deadlines

Key dates to know for MTD for VAT

Let’s check out among the key dates round Making Tax Digital that you should know.

This consists of these deadlines arising that you just’ll want to pay attention to so you’ll be able to stay compliant with MTD.

You must also view Sage’s MTD Hub to make sure you carry on high of key dates.

  • Could 2015: The chancellor publicizes the “dying of the annual tax return” and impending digitalisation of VAT, Earnings Tax and Company Tax inside 5 years. Subsequently, Making Tax Digital is created and plans are made to start out rolling it out.
  • December 2015: HMRC launches private tax accounts, by which particular person taxpayers can handle tax on-line (e.g. PAYE codes, Nationwide Insurance coverage contributions data, and so on).
  • April 2019: Making Tax Digital for VAT got here into impact. Most companies over the £85,000 VAT threshold needed to start following the principles for his or her first full VAT interval after this date. MTD-compatible software program have to be used for submitting VAT Returns, and related VAT accounting data have to be stored digitally.
  • October 2019: MTD for VAT got here into impact for companies that have been deferred in April 2019. This listing largely includes bigger companies and organisations, equivalent to group firms and public sector organisations.
  • April 2021: The tender touchdown interval got here to an finish. Previous to this, it was potential for these utilizing MTD for VAT to manually copy and paste information. However after this date, the motion of knowledge from one place to a different have to be each automated and digital—one thing referred to as digital linking.
  • April 2022: MTD for VAT was extended to all VAT-registered businesses. This consists of people who have been voluntarily registered for VAT. The principles and necessities of MTD for VAT stay the identical: for the primary full VAT interval following April 2022, any particular person or enterprise registered for VAT should use MTD-compatible software program for submitting VAT Returns, and related VAT accounting data have to be stored digitally.
  • January 2023: A new penalty system applies to Making Tax Digital late submissions. It signifies that these lacking a deadline earn a penalty level. As soon as a given threshold has been handed, a monetary penalty of £200 is robotically utilized.
  • April 2024: Making Tax Digital for Income Tax (also referred to as Making Tax Digital for Earnings Tax Self Evaluation) begins for sole merchants and landlords with gross revenue of over £10,000 per 12 months. That is separate to MTD for VAT, and has its personal guidelines and rules.
  • April 2025: MTD for Earnings Tax is prolonged to common partnerships that once more have revenue over £10,000 per 12 months.
  • April 2025: The penalty system that started in January 2023 is prolonged past MTD and applies to all these utilizing the Self Evaluation system.
  • April 2026: That is the earliest date that Making Tax Digital for Company Tax may start, in that the federal government has stated it gained’t begin previous to this. This can have an effect on incorporates companies which are answerable for company tax.

Will the federal government prolong MTD for Earnings Tax to different people and companies, equivalent to these incomes beneath £10,000?

Or those that use Self Evaluation for different issues, equivalent to declaring curiosity on investments, or if they’ve salaries over £100,000?

It’s potential.

However there have been no bulletins and subsequently we don’t have any dates for when this would possibly occur.

Nonetheless, the expertise of the rollout of MTD for VAT over a number of years signifies this can be seemingly.

Making Tax Digital for VAT software program

Uncover how Sage Accounting may also help you get your MTD for VAT submission proper, calculate your invoice and submit your VAT Return with ease.

Find out more

Your timeline for making ready for MTD for VAT

Listed below are dates on your diary if you happen to’re switching to MTD for VAT.

First, you should sign up for MTD for VAT.

No, this doesn’t occur robotically.

Previous to signing up, you should have chosen which MTD-compatible software program you’re going to make use of, as a result of HMRC gained’t allow you to proceed in any other case.

When you’ve signed up for MTD for VAT, you should activate that characteristic within the software program. Communicate to the software program vendor when you have any questions on this.

You probably have an accountant who handles your VAT, they will join in your behalf, and subsequently file returns in your behalf, like they may’ve performed earlier than. Simply ask them.

However do keep in mind that this doesn’t take away the requirement so that you can maintain related VAT data digitally.  

The deadlines for signing as much as MTD for VAT are peculiar, however are in place to keep away from you paying twice in your present VAT Return.

Assuming you’re paying by direct debit, you shouldn’t join lower than:

  • Seven days earlier than your return is due
  • 5 days after your return is due.

For these switching as of April 2022, for instance, MTD for VAT solely applies for the primary full VAT interval after that date.

For people who file quarterly VAT Returns, this implies the next begin dates:

  • 1 April 2022: If the earlier VAT quarter ended 31 March 2022.
  • 1 Could 2022: If the earlier VAT quarter ended 30 April 2022.
  • 1 June 2022: If the earlier VAT quarter ended 31 Could 2022.

As a result of there’s nonetheless a must file VAT Returns by one calendar month and 7 days, on the newest, this implies the preliminary VAT Returns for MTD for VAT have to be filed by the next:

  • 7 August 2022 for a VAT quarter starting 1 April 2022.
  • 7 September 2022 for a VAT quarter starting 1 Could 2022.
  • 7 October 2022 for a VAT quarter starting 1 June 2022.

As one other instance, for individuals who file month-to-month VAT Returns, the primary MTD for VAT submission deadlines are earlier:

  • 7 June 2022 for a VAT month starting 1 April 2022.
  • 7 July 2022 for a VAT month interval starting 1 Could 2022.
  • 7 August 2022 for a VAT month interval starting 1 June 2022.

If you happen to’re new to utilizing MTD for VAT software program, that is the primary time you’ll be required to create a VAT Return with it.

However don’t fear, this is usually very straightforward.

MTD for VAT deadlines: FAQs

Listed below are the solutions to some regularly requested questions on MTD for VAT and its deadlines.

Is Making Tax Digital only for VAT?

No. VAT was chosen by the federal government for the primary wave of Making Tax Digital, however revenue tax and company tax each have their very own MTD schemes, and subsequently their very own deadlines.

MTD for Earnings Tax is because of start in April 2024, whereas MTD for Company Tax gained’t start any prior to April 2026.

Regulate Sage’s MTD Hub for an up-to-date itemizing of all the present MTD deadlines.

Who must register for Making Tax Digital for VAT?

Since April 2022, just about all people and companies which are registered for VAT must register for and comply with the MTD for VAT guidelines.

This consists of these which are voluntarily registered for VAT.

Previous to April 2022, solely companies that have been over the VAT threshold (presently £85,000) wanted to register for MTD for VAT (though voluntary registration was potential).

If you happen to’re in any doubt, see our separate article about MTD thresholds.

What was the tender touchdown interval for MTD for VAT?

Again in 2019, the federal government introduced that it might let companies maintain utilizing copy and paste to maneuver information from one place to a different with out contravening the Making Tax Digital laws.

Beneath the MTD laws, this isn’t allowed. It states that the info should transfer each robotically and digitally. In spite of everything, that’s one of many causes MTD was created.

The tender touchdown interval led to April 2021, and there are not any indicators that HMRC goes to permit a second tender touchdown interval for companies switching to MTD for VAT now.

Subsequently, companies beginning utilizing MTD for VAT now must know the digital linking rules from day one.

Has Making Tax Digital for VAT been postponed?

MTD for VAT has not been postponed.

The ultimate milestone deadline was the extension of MTD for VAT to all VAT-registered companies, which started in April 2022.

Now, MTD for VAT applies to all VAT-registered companies.

MTD for Earnings Tax has been postponed a number of instances.

It was initially supposed to be the primary wave of Making Tax Digital again in 2018.

Nonetheless, following suggestions from consultations, authorities plans have been radically altered such that MTD for VAT was the primary roll out of Making Tax Digital in April 2019.

It was subsequently introduced that MTD for Earnings Tax would start in April 2023, however this was then postponed to April 2024.

What occurs if I don’t join Making Tax Digital?

If you happen to don’t join MTD for VAT, you’ll now not have a method to submit a VAT Return.

This can imply you’ll miss your VAT submitting deadline and might be topic to the new penalty system that begins in January 2023.

The brand new penalty system is constructed round factors, and lacking a deadline incurs one level. A factors threshold is utilized, based mostly on how regularly you file returns.

When you cross the factors threshold a £200 penalty is robotically utilized.

It’s value noting that some individuals can apply to HMRC to be digitally excluded. This implies they gained’t should take care of Making Tax Digital.

Nonetheless, this exclusion is just for distinctive circumstances, and you’ll’t simply choose into it.

You want an excellent motive, equivalent to the truth that the remoteness of your location means you’ll be able to’t entry the web, or your spiritual beliefs prohibit you from utilizing a pc.

Remaining ideas on MTD deadlines

Making Tax Digital has arguably had a tough gestation, because the revised deadlines show.

Nevertheless it’s reworking the way in which VAT-registered companies deal with their accounting for the higher.

MTD supplies much better perception into your accounting, and subsequently you’ll be able to take management of significant enterprise finance points equivalent to money circulation and forecasting with ease.

Editor’s be aware: This text was first printed in February 2022 and has been up to date for relevance.


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