There is lower than two months to go earlier than all VAT-registered companies should adjust to Making Tax Digital (MTD) – and there are solely restricted exemptions for opting out.

From 1 April 2022, VAT returns have to be filed by functionally suitable software program that hyperlinks to HMRC’s API platform.

Previously, solely companies whose taxable turnover exceeded the £85,000 VAT registration threshold wanted to adjust to the necessities of MTD, however from April, this can grow to be necessary for all VAT-registered companies.

See additionally: Digital tax data: Next step for VAT-registered companies

These embrace these whose taxable turnover is under the registration threshold, however that are voluntarily registered.

Martyn Dobinson, a companion at Saffery Champness and a member of the agency’s Land and Rural Practice Group, means that for some companies with minimal VAT restoration, deregistration may very well be preferable to the extra compliance.

Taxpayers can apply for an exemption from MTD for VAT, however solely in very restricted circumstances, corresponding to unreliable web entry and age or incapacity making it impractical for the taxpayer to make use of a pc, pill or smartphone.

Mr Dobinson says HMRC will contemplate functions for exemption on a case-by-case foundation.

“Where the only reasons are additional effort, time or cost to transition or comply, an exemption is unlikely to be given,’’ he points out.

“Those reasons may, however, be taken into overall consideration with other factors.”

Penalties delayed

HMRC has delayed the implementation of its new penalty regime for the late submitting of VAT returns and cost of VAT till 1 January 2023.

This new regime was as a result of come into pressure from 1 April 2022, however HMRC has delayed the implementation as a result of extra time wanted to make sure its IT techniques are prepared.

The present default surcharge mechanism will proceed to use till the deferred new regime is launched, says Mr Dobinson.

He advises taxpayers who’re having issue paying VAT liabilities on time to debate their circumstances with HMRC.

It might be able to agree a “time to pay” association to assist handle the danger of late cost penalties, he provides.

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