Making Tax Digital ― signing up for MTD

Produced by Tolley
Making Tax Digital ― signing up for MTD

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Making Tax Digital ― signing up for MTD
  • Background
  • Timelines
  • Overseas businesses
  • Digitally exempt persons
  • Notifying HMRC
  • Opting out
  • Turnover test
  • Trading under the VAT registration threshold
  • Signing up to MTD
  • More...

This guidance note provides an overview of how businesses or their agents need to register for the MTD provisions. This note needs to be read in conjunction with the Making Tax Digital ― VAT ― returns and compliance guidance note.

HMRC has produced some Help and support for Making Tax Digital videos to assist businesses with signing up to MTD and using MTD.

HMRC has also provided further information which may be of use in MTD ― HMRC developer hub.

Background

This guidance note provides an overview of how to register for Making Tax Digital and submitting VAT returns using MTD-compatible software. HMRC has published VAT Notice 700/22 which provides details of the requirements and should be read by anyone preparing for the regime.

Businesses that currently do not use software to complete their business records or use software that is not MTD-compatible (functional compatible) will need to take steps to ensure that they are VAT compliant with the new rules which came into effect on 1 April or 1 October 2019. The rules also apply to agents who submit VAT returns on behalf of their clients as they will need to use MTD-compatible software.

Currently, the MTD provisions only apply to businesses with a turnover exceeding the VAT registration threshold (£85,000) and it only applies to the business’ VAT obligations. Businesses are required to use the MTD online provisions with effect from April or October 2019. Businesses that are trading below the VAT registration threshold are not required to file their returns using the MTD provisions; however, they can do so voluntarily if preferable. Businesses will also be able to voluntarily opt in for other taxes if they wish to benefit from what the Government is calling a ‘streamlined digital experience’.

The scope of MTD will not be extended beyond VAT reporting obligations until April 2021 at the earliest as the Government announced in the Spring Statement 2019 that it would not include any other taxes into MTD during 2020.

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