By Henry Williams on Small Enterprise UK – Recommendation and Concepts for UK Small Companies and SMEs
By April 2022, all companies, no matter earnings, might want to adjust to Making Tax Digital (MTD) for VAT.
The laws requires all enterprise homeowners to take care of digital information and file periodic VAT returns by means of MTD-compliant software program.
Supplied you’re ready, there’s nothing to fret about – in actual fact, it needs to be simpler and fairer than ever so that you can handle your VAT tasks.
We spoke to Becca Chappell, product supervisor, compliance, at Sage, to search out out what small enterprise homeowners must do to prepare for MTD for VAT, and the way accounting software program can assist.
What’s MTD for VAT?
Chappell: “MTD for VAT is the brand new laws from HMRC that impacts how VAT registered companies do their VAT accounting. When it was launched in April 2019, it solely utilized to companies that had been above the VAT threshold of £85,000. However as of this 12 months, all VAT registered companies, no matter turnover, must adhere to it.”
How ought to enterprise homeowners put together for it forward of April 2022?
Chappell: “Firstly, you need to assessment your working strategies. If you happen to use an accountant already, communicate to them about your tasks; in the event you don’t, contemplate reaching out to 1.
“If you happen to’re already utilizing software program, examine that it’s MTD-enabled. If not you’ll want to search out accounting software program or bridging software program that’s MTD-compliant.
Uncertain whether or not your accounting software program is appropriate? You’ll find a full record of MTD-compliant software program on Gov.uk.
Chappell: “You additionally must make it possible for your processes are in step with the MTD guidelines, reminiscent of preserving digital information. You ought to be preserving information anyway in the event you’re registered for VAT so the distinction is you have to to maintain these digitally. MTD for VAT is already operating, so while you’re prepared, you possibly can join.
“There’s a great deal of steerage on the market – learn up, educate your self and ensure you’re prepared for it.”
What’s the distinction between accounting software program and bridging software program?
Chappell: “The distinction is that your accounting software program shops all of your digital information for you, and acts as one place so that you can submit your VAT return.
“Bridging software program is primarily used as a connector to HMRC to submit your vat returns if in case you have both received non-MTD compliant software program, or in the event you’re nonetheless utilizing spreadsheets.
“You possibly can proceed to make use of spreadsheets in the event you so want through the use of bridging software program to submit your VAT return, however you continue to must comply with the MTD guidelines round digital hyperlinks. This consists of ensuring you’re solely utilizing formulation and never copy and pasting info throughout. Bridging software program is out there, nevertheless it’s not ultimate for MTD.”
A digital hyperlink happens each time VAT knowledge is transferred between two digital paces for the needs of submission to HMRC. It might be by way of contact between two software program programmes, emailing a spreadsheet, and even utilizing a reminiscence stick. You’ll find an intensive clarification of the principles round digital hyperlinks right here.
What information do I must preserve and when is the deadline?
Chappell: “The deadline might be from the day of your first accounting interval that falls on or after 1st April 2022.
“The information you’ll must preserve might be depending on the VAT scheme that you simply’re in, which you need to know out of your preparation. The important thing issues that may should be stored digitally will embrace enterprise identify and tackle, VAT registration quantity, the VAT accounting scheme that you simply use, the VAT on items and companies that offer your online business, and any gross sales invoices.”
How do I file an MTD for VAT return?
Chappell: “If you happen to’re utilizing accounting software program, it needs to be pretty simple. Inside your accounting software program, there’ll often be a operate saying ‘Create a VAT return’ or ‘VAT report, which is able to produce your VAT return for you through the use of the figures from the knowledge that you simply’ve entered.
“You simply must examine the figures, and add any changes. Then simply hit submit and it’ll go instantly out of your software program to HMRC. After you’ve saved, you need to get a abstract of what you’ve submitted and any excellent duties you’ve nonetheless received to do.”
Can I take advantage of my cellphone for MTD for VAT?
Chappell: “To a level, and it will depend on the software program. With Sage Cloud Accounting software program, there’s an app you need to use in the event you’re out and about to ship invoices, which is totally MTD compliant.
“For instance, in the event you’re a plumber and also you’re out on a job, you possibly can ship an bill by electronic mail. You can even get fee on the app and take footage of your receipts while you’re out buying issues. However you must go surfing for the precise VAT return, since you ought to pay a bit extra due diligence to that.”
What do I do with paper receipts/invoices?
Chappell: “All you must do is take an image and add it into the app. If you happen to’re nonetheless utilizing spreadsheets, you must preserve these paper receipts, but when not, so long as you’ve received a replica and it consists of the VAT registration quantity, time of provide, bill quantity, and the speed of VAT on there, that’s superb. Your software program ought to mechanically preserve it for the legally required period of time.”
How can accounting software program assist with MTD for VAT?
Chappell: “If you happen to undertake compliant software program, you’ll have the ability to view all of your tax info in a single place, and also you’ll get peace of thoughts that you simply’re updated as laws modifications.
“As HMRC will get extra suggestions, it’d change some elements of MTD for VAT and your software program supplier will care for that for you. Simply urgent a button to create a VAT return will prevent a lot time as effectively, and offer you a lot time again to spend on your online business.”
Go to the Sage web site for extra info on Making Tax Digital and to be taught extra about accounting software program.
This text was written as a part of a paid for content material marketing campaign, in partnership with Sage.
*As Product Supervisor for Compliance Data in Sage, Becca loves nothing greater than digging deep into the element of compliance modifications within the UK & Eire. With a background of Accountancy in each Apply and Business she brings a twin perspective to any upcoming modifications and shares her experience with groups inside Sage to make sure all of their merchandise are compliant.
The submit How you can use MTD to get VAT proper appeared first on Small Enterprise UK.
