Businesses that file annual VAT returns will still be able to use their VAT online account until 15 May 2023.
By law, VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.
If clients do not sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty. The best way for businesses to avoid penalties is to start using MTD now. Even if clients already use MTD-compatible software to keep their records and file their VAT returns online, don’t forget they must sign up to MTD before they file their next return.
If clients haven’t signed up to MTD and started using compatible software already, they must follow these steps now:
Step 1. Choose MTD-compatible software that’s right for them – you can find a list of software on GOV.UK
Step 2. Check the permissions in their software – once they’ve allowed it to work with MTD, they can file their VAT returns easily. Go to GOV.UK and search “manage permissions for tax software” for information on how your clients should do this.
Step 3. Keep digital records for their current and future VAT returns – you can find out what records they need to keep on GOV.UK
Step 4. Sign up for MTD and file their future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.UK and search “record VAT”.
Clients who file quarterly or monthly VAT returns must complete these steps in order to file their returns due after 1 November.
If clients are already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they’re automatically exempt.
Clients can check if they can apply for an exemption on GOV.UK, if it’s not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.
More information on how to support clients on can be found at GOV.UK, including a step-by-step guide to signing up for MTD on clients’ behalf.
Businesses may be able to get a discount on software through the UK government’s “Help to Grow: Digital scheme”, which offers 50 per cent off compatible digital accounting software.
