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Making Tax Digital for VAT registered businesses compulsory from April 2022

Louise Hastings


Since Making Tax Digital came into play in April 2019, VAT-registered businesses in the UK above the £85,000 registration threshold are required to submit their VAT returns using ‘functional compatible software’ and store their VAT accounting records digitally. This is part of the government’s plans to make the tax system more resilient and effective, to boost business productivity and to support taxpayers.

The April 2022 Deadline

As of 1st April 2022, all VAT – registered businesses will be required to comply with the MTD regime for their VAT accounting.

This will affect around 1.1m UK businesses that are registered for VAT with taxable turnover below the current threshold of £85,000. These businesses may not have considered MTD for VAT before now. As the deadline is fast approaching, we have created an MTD checklist to help businesses get themselves up to speed with MTD for VAT ready for the April 2022 deadline.

The Moore UK MTD Checklist
  1. Will you be impacted by MTD for VAT in April 2022?
If your business is currently VAT registered, then using Making Tax Digital for VAT will be a requirement for your business as of April 2022. You will need to follow the MTD for VAT rules for the first full VAT period that falls after the 1st of April and then all subsequent ones.
It is important to ensure that you are keeping digital records for VAT and if you are using more than one piece of software then they must be digitally linked.
The force felt by MTD for VAT in April 2022 for VAT registered businesses below the threshold is likely to be less impactful if you are currently using cloud accounting software and could involve no more than signing up for MTD for VAT via the HMRC MTD Portal and then activating the feature in your software, or you can speak to your Moore Adviser who will be able to help activate MTD for VAT for your business.
Are you using spreadsheets or other manual records to prepare your VAT return? Then you will need to consider ways to replace the existing process with a software driven approach for recording VAT details and filing VAT returns.
  1. Who is entitled to claim exemptions and deferrals from MTD for VAT?
If you are a business that is considered digitally exempt then you may be able to claim exemption from MTD for VAT. Those that are digitally exempt include people with religious beliefs that are not compatible with the requirements, or people whose age, disability or remoteness means it is not reasonably practical for them to use digital tools.
  1. Is your current software functionally compatible for MTD for VAT?
You will need to use software that is compatible with HMRC’s Making Tax Digital for VAT regime. If you are unsure about what software is compatible for Making Tax Digital you can check on the Government’s website here. You must also ensure that your software can communicate electronically with HMRC’s portal, so you that you can file your VAT returns electronically.
  1. Using desktop accounting software?
If you are using desktop accounting software you may need to update it for MTD if your software provider has offered a solution for MTD filings. If you have very old software, it may not have been updated for MTD so you will need to consider alternative solutions to have in place in time for the deadline of April 2022.
  1. Do you feel confident using your cloud accounting package or do you need training?
If you feel that you require more training on your cloud accounting package then it is worth thinking about booking your training soon, with your local Moore UK office, rather than leaving it closer to the deadline.
  1. Preparation is key!
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. Preparation is key, and we would recommend that businesses register for MTD for VAT now, before you are legally required to make the switch. There are lots of benefits to registering early, as it will give you an opportunity to get used to any new compatible software and digital links and allows you to iron out any issues in plenty of time.
How Moore UK can help

If you would like more information on MTD for VAT, our expert team are on hand to guide you through the switch.

We offer a range of services to support our clients, including:
  • Setting up cloud software;
  • Training;
  • Preparing the accounting records and VAT returns, if required;
  • Reviewing VAT returns prepared by our clients, prior to them being submitted to HMRC.
Our team are here to discuss with you the different options that are available to make the switch as seamless as possible, depending on your business needs.