With the government in the process of Making Tax Digital, businesses are moving towards keeping finance records digitally. After several delays, the MTD for VAT scheme comes into full force from 1st April 2022.
Previously the rules only applied to VAT registered businesses with a taxable turnover over the registration threshold. Under MTD, they are required to keep digital records and submit their return using software.
From April 2022 any business registered for VAT must keep their records digitally, even if they register for VAT voluntarily. So what does this mean for businesses?
How do I record and submit my VAT information digitally?
Under the MTD rules, businesses must use a digital method to log their VAT transactions and submit their VAT return. You’re allowed to use either:
- software which is compliant with HMRC’s requirements for logging and submitting VAT records. The software submits the return directly to HMRC for you, so you won’t need to visit the HMRC website to submit.
- bridging software which connects your digital records (such as a spreadsheet) to the HMRC system to submit your return.
The good news is that there are lots of different types of software available (including our very own Pandle). It’s designed for all types of users, and for their accountants to have access to, if they have one.
Does MTD VAT software calculate my return for me?
The process for using MTD VAT software is easier than it sounds. Some software even automates lots of the processes for you. MTD software like Pandle automatically calculates your VAT return each time you invoice a customer or enter a transaction.
Doing it this way also means that you can run VAT reports to keep on top of what you owe (or what you can claim back).
Does it matter what VAT scheme I use?
MTD rules for VAT apply regardless of which VAT accounting scheme you use. Thankfully software providers are ready for this.
In Pandle users just need to select which scheme they use for VAT, and Pandle handles the calculations based on that information. It’s easy to switch Pandle to a different scheme too, so if the business changes and you need to start using a different VAT scheme, it’s not a problem.
Learn more about using Pandle software for your VAT registered business or set up your free account. If you’re an accountant looking for MTD compliant cloud software to use with clients, find out more about Pandle Partners, or our white label solution, Brandle.