Tackling three questions small companies could have round MTD for VAT

Within the UK, because the climate (barely) warms up with spring approaching, small enterprise house owners can sit up for the approaching months with a way of optimism that will have been lacking over the previous two years. The longer term seems brighter as lockdowns finish and restrictions ease. 

Some small companies, nevertheless, could also be much less enthusiastic, with trepidation across the upcoming Making Tax Digital (MTD) for VAT deadline, which comes into drive from April 2022. It signifies that VAT-registered companies with taxable turnover underneath £85,000 which can be submitting VAT by way of the HMRC portal or by way of the put up should keep data digitally and file by way of MTD-compatible software program. 

Whereas this may sound daunting, the transition to digital tax returns doesn’t must be. As an alternative, it may be used as a chance to speed up digital transformation, driving vital advantages for your corporation and your prospects. That stated, it’s nonetheless comprehensible when you’ve got questions in regards to the subsequent deadline, and how one can guarantee compliance. 

Right here, we sort out three questions small enterprise house owners could have about MTD for VAT. 

What data do companies have to preserve digitally for MTD?

For small enterprise house owners, it’s completely comprehensible to really feel overwhelmed by MTD for VAT. With loads already in your plates, altering the way you submit VAT returns could really feel like an extra headache. Fortunately, not each side of this course of is about to vary. 

In truth, the data it’s worthwhile to preserve on your VAT return will stay the identical – it’s solely the place and the way these data are saved which have modified. 

So, for each merchandise, you’ll have to report:

• The time of provide
• The worth of provide
• The tax fee

For a complete record of each report that must be stored digitally, HMRC has you lined. 

How do I file a MTD VAT return?

Now that we’ve lined which data it’s worthwhile to preserve digitally, it’s time to reply one other nuts-and-bolts MTD for VAT query – how precisely do you file an MTD VAT return? 

It may be extraordinarily easy. HMRC-approved accounting software program, like Xero, has an MTD for VAT operate, which you’ll want to make use of to submit your return.

In any other case, in the event you nonetheless use spreadsheets for record-keeping, you should utilize bridging software program to file your return, even when this will likely add wrinkles of complexity. MTD requires digital hyperlinks in order that data can switch between completely different software program. That is what a bridging software program does, appearing as a (you guessed it) bridge between them. 

This switch should be digital, nevertheless, and you’ll’t copy and paste data from one platform to a different. This implies you’ll want to make use of spreadsheet formulation to create digital hyperlinks and guarantee compliance with MTD for VAT.

What are the advantages of MTD for companies?

Whereas it’s necessary to acknowledge that many small companies will really feel that MTD compliance is an pointless burden, this shouldn’t overshadow the truth that MTD for VAT, and the push to digitalise, may be extraordinarily useful. 

By turning to accounting software program to automate processes and submit your VAT return, it can save you time, enhance the accuracy of your accounts and provide help to to get your taxes proper. In truth, analysis by HMRC on MTD for VAT discovered that present members are already feeling extra assured about submitting their returns underneath the brand new guidelines. Small enterprise house owners can get pleasure from a bunch of extra advantages, too, together with:

• Fewer reporting errors
• Much less time spent on paperwork
• Dependable report protecting
• Quicker returns submitting
• Higher collaboration together with your accountant 
• Actual-time overview of enterprise efficiency and money move

In case you have extra questions on MTD for VAT, you too can flip to our complete FAQs, or a few of our different useful sources, to make sure you’re all set for compliance, and to benefit from the chance it represents.