Ongoing plans for the roll-out of Making Tax Digital (MTD) for VAT

This is an update on the plans for the roll-out of Making Tax Digital (MTD) to VAT-registered businesses under the £85K threshold from 1 April 2022.

​MTD will be extended to the remaining VAT-registered population (those with turnover below the £85,000 VAT threshold), for their first VAT return period starting on or after 1 April 2022.

The regulations giving effect to this change were made in September 2021.​

HMRC have issued reminder letters to the whole VAT “under £85k” community. Letters commenced this month and a further 400,000 will be issued before the beginning of July.

Of the VAT businesses affected, over 35% have already signed up to MTD.​ ​ This means that there are just over 600k businesses still to join​ that will be required to sign up to MTD over the coming few months.

Thousands of businesses are currently signing up every week. Communications are continuing to encourage sign ups from the beginning of April in line with VAT filing deadlines.

When businesses should sign up

Although all VAT businesses are mandated to follow the MTD rules from 1 April 22, we advise businesses not yet signed up to MTD to continue with their current method of filing if they are in the middle of their return period on that date.

They should sign up to MTD only after the VAT return for this last “non-MTD” return period has been filed (and any direct debit relating to the VAT due on that return has been collected).

They should however start keeping digital records, if they are not already doing so, from the beginning of their first VAT return period starting on or after 1 April 2022.

Customers should ensure they sign up to MTD VAT at the right time:

• If the business pays its VAT by direct debit, it should sign up:

• • at least seven days before the first MTD return is due; but
  • at least five days after the last non-MTD return is due and filed.

Signing up too close to the date the return is due, can result in duplicate payments being collected.

• If the business does not pay by direct debit, it should sign up at least three days before its first MTD VAT return is due.

If you have any questions, please contact support@liquidaccounts.com