Glos SMEs should choose MTD software wisely as April 2022 deadline fast approaches

Glos Small businesses should review end-to-end VAT process to ensure it is fully compliant with the upcoming MTD for VAT rules

Glos SMEs should choose MTD software wisely as April 2022 deadline fast approaches

As the deadline for Making Tax Digital (MTD) for VAT approaches, accountants urge businesses to choose wisely when it comes to adopting MTD compliant software to ensure a smooth transition.

Once the right MTD software for the business is in place, the next step is to review their VAT return process and check that each aspect is digitally linked together.

Many of our clients use spreadsheets to build their business VAT return workings and they draw data from their accounting system in order to do so.

We often see a break in the digital link at this point as the data is simply copied from the accounting system and pasted or manually typed into the spreadsheet, which is not permitted under the MTD rules.

Although ESB has been able to help our clients in bridging these digital gaps, we suspect there are still some businesses unaware of the full extent of their MTD obligations and how easily the digital chain can be broken.

MTD for VAT – are you ready?

MTD for VAT was introduced in April 2019 for businesses with a taxable turnover of above the £85,000 threshold, and will be extended to all remaining VAT-registered below the threshold in April 2022.

MTD is fundamental to the delivery of a trusted and modern tax system, making it easier for businesses to get their tax right and supporting the UK to go digital.

HMRC expect most businesses to experience long-term benefits from the MTD initiative, including reduced errors and time saved in managing their tax affairs.

The starting point for businesses who haven’t yet transitioned, is to familiarise yourselves with the new MTD for VAT rules and where necessary, take suitable advice- which ESB accountancy can help you with.

Benefits of MTD

We believe that many businesses are sceptical that the costs of MTD implementation justify the potential benefits to the government, and that this may also be seen as a costly extra compliance exercise.

There may be some taxpayers who value the more regular discipline of tax reporting and the ability to identify their likely tax liability earlier and, therefore, provide for it earlier.

According to a HMRC survey of over 2,000 businesses, 69 percent experienced at least one benefit from MTD, including faster returns submissions and increased confidence that they were getting tax right. 67 percent felt that MTD had reduced the potential for mistakes during the return process.

As of December 2021, nearly 1.6 million taxpayers have joined MTD for VAT with more than 11 million returns successfully submitted.

Some businesses may be eligible for an exemption from MTD, if it is not reasonable or practicable for them to use digital tools for their tax.

Please talk to us at ESB Accountancy to discuss how your business can comply with the new tax, finance and accounting laws – with several decades of financial experience here in Gloucestershire you can either ring us now on – email us on edith@esbaccountancy.co.uk or click the Contact Us buttonpayroll bookkeeping services small business help contact esb accountancy gloucestershire cheltenhamor please fill the form at the bottom of the contact us page.

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