The UK has introduced a radical new way of making tax returns for VAT by using digital software. But it’s not just businesses which will be affected as HMRC says the change affects everyone who pays taxes in the country, including honest taxpayers and those with no taxable income at all.
The “hmrc making tax digital” is a UK government initiative designed to make the VAT process easier for all businesses. The HMRC has released some helpful information on how to ensure you comply with this new law.
Is your company VAT registered? If that’s the case, keep reading. The VAT system has been altered by the government’s new Making Tax Digital legislation, and you need to understand how this impacts you.
Making Tax Digital is already a reality.
From April 2022, all VAT-registered firms, regardless of taxable sales, will be required to file tax returns under MTD regulations. HMRC is making a massive push into the digital era, but they’re beginning with VAT. So, if you haven’t already done so, now is the time to start thinking about your responsibilities and how they’ve changed.
So, where should I begin?
Create a VAT account online. As quickly as possible.
You may use your Government Gateway account to register with HMRC and submit your VAT returns. MTD will help you keep organized after you’ve signed up since you’ll need to record all of your VAT transactions digitally throughout the year.
The next step is to ensure that your accounting software is MTD-compliant. Accounting software that can link directly with HMRC when you submit your return is known as “functional compliant software.”
If you’re already utilizing compatible Making Tax Digital software, you’re good to go.
If you have a VAT inspection, which is quite possible, all of the information is in one place, so you don’t have to do any further work. “Going digital” can also help you avoid fines for late filings and non-payments, which may be costly, and more so for repeated defaults or errors.
Digitally submitting your VAT return
You’ll save a lot of time if you use QuickBooks since it handles the majority of the work for you. It shows you how much VAT you owe for the accounting period, and all you have to do is click a button to file your return electronically. It’s that easy.
What if I’m not a QuickBooks user?
Perhaps you still use Excel for accounting – if so, you’re not alone, and we understand how difficult it is to abandon a tool you’ve grown to rely on over time. Even if you maintain track of your finances using Excel, you must submit your VAT return in accordance with MTD standards by April 2022 at the latest.
You’ll have to import all of your data retrospectively if you wait until the last minute. If you purchase MTD-compatible software today, it will follow your data throughout the year, making filing your tax return in 2022 as simple as clicking a mouse.
Changing to MTD software seems difficult!
Don’t worry if you’re not sure how to navigate the new MTD standards and requirements on your own. If this is your first time filing, things may seem complicated. This is where an accountant’s expertise may be invaluable. When you have expert assistance on board, you can file your returns without worrying about compliance, deadlines, or any problems.
Accounting in the cloud
Accountants have more time to help you build your company now that digital accounting software is the standard. Just make sure you hire someone who has experience with digital accounting software like QuickBooks. It’s the best option.
What if my VAT return submission doesn’t proceed as planned?
Don’t worry; HMRC recognizes that errors occur. However, it is anticipated that you handle your return with “due care,” otherwise you may face penalties if it is discovered that your mistakes were careless or malicious.
To prevent large penalties, it’s critical to know what to do when things go wrong. The most important thing to remember is that any fines you may incur will be minimized if you act quickly to correct the situation.
When things go awry, you may contact HMRC directly by phoning 0300 200 3700. Business VAT guidance are also available from HMRC.
Remove any mistakes.
To eliminate mistakes and speed your filings, HMRC is going digital. From April 2022 onwards, using cloud-based accounting systems such as QuickBooks will be required. There is no need for manual transcribing and there is less possibility for human mistake if all of your VAT data are digitally recorded. You may also submit your VAT return with confidence.
Was this article on Making Tax Digital VAT Returns helpful to you? On our small business blog, QuickBooks covers a variety of other business-related issues. It’s all part of the help we provide to UK small company owners.
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This post was syndicated by MediaFeed.org and originally published on the QuickBooks Resource Center.
The “making tax digital open source” is a project that the UK government has started. The project was initially only for businesses but now it will be open to individuals as well. This means that you can make sure you are compliant with the law by checking out this site.
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