Making Tax Digital for VAT is a government initiative to involve small businesses and the self-employed to keep digital tax records and returns. The plan to move fully online will be rolled out over a number of years, with the eventual aim of going completely paperless by 2026.
Since MTD for VAT is going to be compulsory for all VAT-registered businesses from April 2022, get ahead and start digitally submitting your taxes now. All you need to do is sign up for MTD on the HMRC website before turning MTD on in QuickBooks. Follow this step-by-step guide.
If you're an accountant or bookkeeper, follow this guide.
After you sign up for MTD, you’ll receive an email confirmation from HMRC containing your new MTD log in information. The next step is to turn on MTD and authorise QuickBooks to interact with HMRC. Once complete, you can submit VAT returns in an MTD-compliant way.
Making Tax Digital for VAT is currently compulsory for all VAT-registered businesses with a taxable turnover of over £85,000. From April 2022 this is going to be extended to all VAT-registered businesses – whatever they earn.
Businesses with a taxable turnover below the VAT registration threshold can also sign up for MTD for VAT voluntarily until then. This also applies to other VAT entities, such as charities, government bodies and limited companies.
Yes. QuickBooks Online is fully MTD compliant. A key change is that from April 2019 HMRC will no longer provide online tools for digital submission of VAT returns. QuickBooks makes it easy to store digital records securely and file VAT directly with HMRC.
Keeping your records digitally for MTD purposes means that you must store a digital copy of the transactions which make up the figures on your VAT return. QuickBooks Online automatically does this for you. Think of it as a transformation from spreadsheets and paper records to a new online system.
Watch this video by HMRC which explains digital record keeping in more detail.
Once you’ve reached the VAT registration threshold you must comply with the requirements of MTD. This is still the case even if your taxable turnover subsequently falls below the threshold, unless you meet one of the other exemptions detailed in the HMRC VAT Notice 700/22: Making Tax Digital for VAT.
Yes, but not for the same period. That is, if you've filed a VAT return for a period from 01/01/2021–31/03/2021 successfully under MTD using QuickBooks, then you can't file the VAT returns for the missed period before 01/01/2021–31/03/2021.
If you wish to file the VAT return before that period, then you need to use QuickBooks trial version and then submit the missing period using the trial version.
Do you have a question about MTD? Post it on our Community and start a discussion with an expert.
*QuickBooks MTD software currently supports Standard, Cash and Flat Rate schemes. QuickBooks Bridging Software supports Standard and Cash schemes. Businesses whose home currency is not GBP are currently not supported for MTD.