Making Tax Digital (MTD) requires most businesses with a taxable turnover of £85,000 or more to keep digital VAT records and to submit their VAT returns through MTD compatible software.
For most affected businesses, MTD comes into effect from the first VAT return period starting on or after 1 April 2019. However, HMRC is reporting that many businesses have yet to sign up.
Businesses should sign up for Making Tax Digital at least one week before their first VAT return under Making Tax Digital is due. Those that pay their VAT liabilities by direct debit will need to register earlier as they cannot sign up in the 7 working days leading up to, or the 5 working days after a VAT return is due. Therefore, any businesses that need to submit a Making Tax Digital compliant monthly VAT return for the period to 30 April should take action immediately.
The sign up process is quite straightforward. In order to successfully sign up, you will need your Government Gateway user ID and password and your VAT number.
You will not be able to sign up unless you have Making Tax Digital compatible accounting or bridging software through which to submit your VAT returns. PEM can offer access to suitable software if you do not wish to invest in your own.