Get your VAT ready for MTD in 2022

From April 2022, all VAT registered businesses regardless of the level of their turnover will be required to register for Making Tax Digital for VAT and submit all VAT returns electronically to HMRC.

From their first VAT period starting on or after 1 April 2022, VAT registered businesses (including self-employed and landlords) that are not already required to operate MTD under the requirements applying from 1 April 2019 will have to:

• keep their records digitally (for VAT purposes only)
• provide their VAT return information to HMRC through Making Tax Digital compatible software

Under MTD, businesses must keep digital records and use third-party software to submit their tax returns to HMRC. Under the changes, those who do not already keep their records digitally will need to start doing so for their VAT obligations. The process of then sending returns to HMRC should become more straightforward, with their returns generated and sent directly from the software they are using to keep their records.

Records you must keep digitally

You need to keep the following records digitally:

• your business name, address and VAT registration number
• any VAT accounting schemes you use
• the VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)
• the VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)
• any adjustments you make to a return
• the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
• the rate of VAT charged on goods and services you supply
• reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
• your total daily gross takings if you use a retail scheme
• items you can reclaim VAT on if you use the Flat Rate Scheme
• your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

Please contact us if you require further information or if you are unsure as to your MTD obligations.