Currently all VAT returns for businesses with a turnover of greater than £85,000 have to be made electronically. From April 1 2022, Making Tax Digital (MTD) is expanded to all VAT returns.
In future, MTD will be expanded to corporation tax and personal income tax.
Making Tax Digital: Extension to all VAT Returns from April 1 2022
Any VAT returns made after April 1 2022 will have to be filed electronically.
In order to help members navigate these changes, the NFRN has prepared a checklist.
While the requirement for digital record keeping starts from April 1 2022, your first return may not be due until the summer of 2022.
If you complete your own return:
- Identify when your last payment due before April 1 2022 is due. Pay this as normal
- Not less than 5 days after this payment is made and not less than 7 days before payment is made, you will need install MTD compliant software. A list can be found on the HMRC website https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat
- Once you have the software you will need to register for MTD at the same website. This cannot be done until you have the software
- You will then need to keep digital records for your VAT returns. HMRC requires that the following records be kept digitally:
- your business name, address and VAT registration number
- any VAT accounting schemes you use
- the VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)
- the VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)
- any adjustments you make to a return
- the ‘time of supply’and ‘value of supply’ (value excluding VAT) for everything you buy and sell
- the rate of VAT charged on goods and services you supply
- reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
- your total daily gross takings if you use a retail scheme
- items you can reclaim VAT on if you use the Flat Rate Scheme
- your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme
You also need to keep digital copies of documents that cover multiple transactions made on behalf of your business by:
- volunteers for charity fundraising
- a third-party business
- employees for expenses in petty cash
You must add all your transactions to your digital records, but you do not need to scan paper records like invoices or receipts.
See https://www.gov.uk/vat-record-keeping/making-tax-digital-for-vat for details.
If your return is completed by an accountant or agent:
- Ensure that your agent has registered you for MTD
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