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What is Making Tax Digital for VAT?

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This guide gives an overview of Making Tax Digital (MTD) and what it means for your Sage 50 Accounts software.


What's changed?

Under Making Tax Digital (MTD) for VAT, businesses are required to file their VAT returns electronically using accounting software, and need to keep digital records of their transactions.

Since April 2019, MTD for VAT rules have applied to businesses with a taxable turnover above the VAT threshold of £85,000. From April 2022, these rules will also apply to VAT registered businesses which have a turnover below the threshold.

What does it mean for businesses?

Under the MTD for VAT rules, affected businesses need to:

  • Ensure you have MTD for VAT compliant software.
  • Start maintaining digital business records for the purposes of VAT.
  • Sign up with HMRC for MTD for VAT.
  • Start submitting your VAT Return through your compliant software.

What do I need to do?

As HMRC no longer provide online tools for digital submission of VAT Returns, if your business is affected you should first check that you have MTD compliant software.

Once you have your MTD compliant software, you need to sign up for MTD with HMRC after your last Government Gateway VAT Return submission, but before your first MTD submission.

You can find out more about the rules in HMRC VAT Notice 700/22: Making Tax Digital for VAT.


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