Laying out a roadmap for MTD deadlines

Deadlines have a behavior of creeping up on you. Even one thing as well-publicised and long-gestating as Making Tax Digital (MTD) can spring a nasty shock on affected companies and their advisors, who’ve a lot on their plates they could miss the federal government laws sloping into view. 

A part of that is the sheer variety of deadlines to recollect for MTD, impacting various kinds of companies at completely different occasions. With this in thoughts, we’ve outlined the important thing dates, serving to you keep on high of what to anticipate and when as you look forward to MTD compliance. 

When did MTD begin?

Manner again in April 2019, companies with a VAT taxable turnover above £85,000 have been obliged to begin following MTD for VAT guidelines. Below MTD for VAT there may be additionally a requirement to maintain digital information and preserve digital hyperlinks. This got here to an finish in April 2021, following a short delicate touchdown interval the place customers may proceed to repeat and paste their information.

Now, the MTD part 2 deadline is quick approaching. From April 2022, all VAT registered companies should adjust to MTD, until they’ve a authorized exemption. 

When do I have to register for MTD for VAT?

The excellent news is that you simply don’t have to vary the dates that you simply often file and pay your taxes, because the deadlines for MTD for VAT are the identical as customary VAT returns. Nevertheless, companies might want to file their first MTD return for the VAT quarter beginning on or after 1 April 2022 utilizing suitable MTD for VAT software program. 

It’s essential to recollect, nevertheless, that companies are unable to enroll to MTD for VAT till after they’ve filed their final customary VAT return.

When you pay by direct debit, you shouldn’t join MTD for VAT till 5 working days after the deadline of your final non-MTD return, or at the least seven days earlier than your return is due. In the meantime, your first MTD return can’t be filed sooner than seven working days earlier than its deadline.

When you pay utilizing different strategies, you gained’t be capable to enroll till 24 hours after your final non-MTD return has been submitted. As for submitting your first MTD return, you’ll have to attend till 72 hours after the enroll course of. Please additionally be certain that you enroll at the least three days earlier than your return is due.

What’s the deadline for MTD for Revenue Tax (ITSA)?

No matter whether or not your online business is registered for VAT or not, in case you are a sole dealer or landlord with an annual turnover above £10,000, you will need to signal as much as MTD for Revenue Tax (ITSA) from April 2024. 

In the meantime, basic partnerships with earnings above £10,000 must comply from April 2025. 

When does the brand new MTD penalty factors system come into impact?

Whereas the transfer to MTD affords loads of carrot – a push to digital transformation, a smoother tax course of – the introduction of the stick was additionally an inevitability. 

Fortunately, HMRC’s point-based system is designed in order that penalties are solely given to those that commonly make errors and miss deadlines. Factors will probably be calculated based mostly on how commonly you submit.

This technique will probably be launched for MTD for VAT from January 2023, and are available into impact with MTD for ITSA from April 2024. Right here’s all the knowledge you want on MTD penalties.

Whereas these deadlines are a fantastic start line for what to be careful for close to MTD, Xero has a bunch of helpful assets obtainable for accountants and small companies seeking to embrace a vivid new digital future.