What the HMRC Making Tax Digital for VAT letters imply for your small business – Sage Recommendation United Kingdom

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What the HMRC Making Tax Digital for VAT letters imply for your small business – Sage Recommendation United Kingdom

Have you ever acquired a letter from HMRC about Making Tax Digital for VAT? When you have, you’re not alone.

HMRC is sending a sequence of Making Tax Digital (MTD) for VAT letters to eligible VAT-registered companies.

That is to allow them to know that the best way VAT information are stored and VAT Returns are submitted has modified, and that they should begin following MTD for VAT.

Nevertheless, if your small business hasn’t acquired a letter but, that’s to not say it gained’t.

Learn this text to seek out out about the advantages of Making Tax Digital, what HMRC’s letters imply for you, and what steps it’s best to take subsequent.

Right here’s what we cowl:

Why Making Tax Digital will profit your small business

Making Tax Digital is likely one of the most vital adjustments to UK companies ever.

Not solely does it assist to scale back errors on the subject of coping with enterprise admin, it enhances productiveness on your firm too.

Spending much less time on admin so you possibly can deal with your small business is vital – by shifting to digital accounting, companies can save a mean of £17,000/27.6 days per yr, based on analysis by Sage.

Why has my enterprise acquired a letter from HMRC?

If your small business has acquired one of many MTD for VAT letters from HMRC, it’s as a result of it’s good to begin protecting digital information and alter the best way you submit your VAT.

The contents of the letters offer you a sequence of steps that should be taken so your small business is following the MTD for VAT guidelines.

Within the phrases of one of many letters from HMRC: “All VAT-registered companies, no matter taxable turnover, might want to begin utilizing MTD for VAT return durations beginning on or after 1 April 2022.”

What do the letters (and Making Tax Digital) imply for me?

It implies that since 1 April 2022, the best way all VAT-registered companies hold their information and submit VAT returns modified.

Now, HMRC requires your small business to maintain information digitally, whereas the submission of VAT information must be executed through MTD compatible software or bridging software.

What occurs if I’ve not acquired a letter from HMRC?

HMRC might be sending out extra letters to companies, so there’s an opportunity you’ll obtain one if your small business is VAT registered and also you’ve not already signed up for MTD for VAT.

Nevertheless, you don’t have to attend to obtain a letter from HMRC to start out utilizing MTD for VAT – you possibly can join it now.

What do the HMRC Making Tax Digital letters say?

The letters start by telling you that it’s good to take motion to prepare for Making Tax Digital.

They state that every one VAT-registered companies want to join MTD for VAT, no matter taxable turnover.

Subsequent, they cowl a sequence of steps so that you can take (the letters go into extra element):

  • You want MTD appropriate software program or bridging software program
  • You will need to use your software program to maintain your digital information
  • You need to go to the Gov.uk web site so you possibly can join MTD for VAT
  • It’s a must to permit your software program to work with MTD, then you can begin submitting your VAT Returns utilizing MTD.

The letters additionally warn that when you don’t begin utilizing MTD earlier than your first MTD for VAT return deadline (your particular deadline must be in your letter), there’s a chance you’ll be penalised.

Moreover, there’s a reference to MTD exemptions (find out more at Gov.uk), and a observe declaring that when you use an accountant or agent that can assist you handle your small business taxes, they will help your transfer to MTD for VAT.

The place you will get assist getting ready for MTD

That will help you along with your preparations for Making Tax Digital, the letters cowl a couple of sources that may offer you the help required to make the transfer to MTD for VAT a easy one.

They embody normal info on Making Tax Digital and particulars on digital record keeping (gross sales and buy information should be stored digitally, whereas invoices nonetheless should be retained for at the very least six years).

As well as, at Sage, we’ve created MTD Hub, which has solutions to questions you might have about MTD for VAT, and you may join a webinar to information you alongside the best way.

There’s additionally info that can assist you be sure you have MTD compatible software, so you possibly can handle and submit your VAT Returns within the appropriate approach.

And we’ve put collectively the next MTD for VAT articles, so you can also make the transfer to all issues digital a breeze:

Remaining ideas on Making Tax Digital

Transferring to Making Tax Digital for VAT would possibly look like a chore – yet one more factor to fret about, on prime of the entire different challenges you must face with your small business.

Nevertheless, it is going to make an actual distinction to the best way you handle your small business admin. As well as, having readability on your small business funds and the tax you owe will imply you possibly can handle your cash extra successfully.

The identical goes for protecting digital information – the times of looking for paper paperwork or submitting them in a cupboard might be over.

Having quick access to all the things through a couple of clicks of your pc or cell phone will imply you save time – and cut back loads of stress too.

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