MTD For All VAT Registered Businesses

Making Tax Digital (MTD) for all VAT registered businesses is a little over a year away, but there are important changes happening in the next few weeks too. If your business is under the VAT threshold (£85,000) and you’re not currently using an approved online bookkeeping software, you will need to update soon.

Even more urgently, if you currently upload XML spreadsheets to your Government Gateway account or upload them to another software in order to facilitate your VAT returns, you need to act now.

As of 8th April 2021 the XML upload option will no longer exist, so to avoid penalties you must change the way you file your VAT returns as soon as possible. You have a few options to choose from:

• Submit your VAT returns via your online Business Tax Account – For further information and to access your Business Tax Account, go to www.gov.uk/guidance/sign-in-to-your-hmrc-business-tax-account If you have never used your Business Tax Account, go to www.gov.uk/government/publications/use-hmrcs-business-tax-account
  • Please Note: This option will no longer be available from April 2022, so it might not be the best choice for your business at this time
  • This option requires you to enter your VAT figures manually
• Submit your VAT returns via an agent – You can appoint an accountant or other approved agent to submit your VAT Returns for you. Agents will also be unable to use XML software. However, they can submit your VAT Returns using their online agent account. Once your VAT account has moved to the new IT system, your agent can use their Agent Services Account to continue submitting your VAT Return. If you have an agent, please speak to them now about this.
• Sign up to Making Tax Digital (MTD) – If you are a business with a taxable turnover above £85,000, you should already be following the MTD rules. You must (do all of the following):  
  • sign up to MTD  
  • keep digital records  
  • submit your VAT Returns using MTD compatible software 

Submitting VAT Returns using XML software does not meet the MTD rules. If your taxable turnover is below £85,000, you can sign up for MTD voluntarily before April 2022. This is because from April 2022 all VAT businesses, no matter what their taxable turnover is, must sign up to MTD. For further information on signing up for MTD VAT, go to www.gov.uk/government/collections/making-tax-digital-for-vat

We strongly recommend that all VAT registered businesses sign up for MTD as soon as possible. If your turnover is above £85,000 and you are not using MTD compliant online bookkeeping software please contact your accountant ASAP so that we may assist you in selecting the best provider for your requirements.

If your business’ turnover is less than £85,000 you will still be required to sign up for MTD and comply by April next year (April 2022), so we would also advise you to get settled with an MTD solution as soon as possible.

If you currently upload XML spreadsheets to complete your VAT return you must act quickly to avoid possible penalties, and we strongly recommend the MTD route.

You can find out more about the MTD-compliant partners we work with on this link. Moving your bookkeeping to an MTD-compliant software has many benefits besides compliance, you could save time, complete administrative tasks more efficiently, and have a better overall view of your business finances. 

If you’d like help selecting a complaint software, please contact us to discuss our recommendations for your business.