Making Tax Digital (MTD) for VAT will apply to businesses trading below the £85k VAT registration threshold (i.e all remaining VAT registered businesses) for VAT return periods starting on or after 1 April 2022.
As a result, such businesses will be required to maintain digital records of their VAT data, submit VAT returns to HMRC via appropriate software and ensure that all data is “digitally linked” throughout their VAT return process. Alternatively, deregistration may be appropriate if trading below the VAT registration threshold.
What constitutes taxable turnover?
VAT taxable turnover is the total value of everything you sell within a 12 month period that is not exempt or outside the scope for VAT purposes.
What is MTD compatible software?
MTD compatible software is an application, that must be able to:
- Record and preserve digital records
- Provide to HMRC information and returns from data held in those digital records by using the API (Application Processing Interface) platform
- Receive information from HMRC via the API platform