The UK government has issued new guidance on extending Making Tax Digital (MTD) to all VAT registered businesses. From 1 April 2022, VAT registered businesses that are not already obliged to operate MTD must comply with MTD rules. In order to comply, UK businesses must have the appropriate VAT software in place.
The report says that approximately 1.1 million businesses will be affected. Specifically, all VAT registered businesses must keep digital records for VAT purposes. They must also provide VAT returns to HMRC using MTD compliant software.
VAT software: good for business
As stated in the guidance, in order to meet the requirements of MTD, businesses need specialised VAT compliance technology.
The good news is that using the appropriate technology does more than enable you to comply with the new MTD regulations. It actually makes VAT compliance easier.
A recent UK government report detailing the impact of MTD on business found that MTD makes VAT compliance simpler and more efficient. However, those benefits only apply if you have the right technology in place.
As the UK government policy paper suggests, “businesses that move to real-time record keeping using accounting software may experience significant productivity benefits, as their software provides an up-to-date picture of their finances.”
Moreover, MTD also reduces the scope for error. And that means that VAT returns are more likely to be accurate and complete.
In addition, reports indicate that digital tax compliance dramatically cuts down a businesses’s administrative demands.
MTD Phase 2
The UK government chose a phased approach to unroll MTD. From 1 April 2021, MTD Phase 2 became active.
MTD Phase 2 involves more extensive technological demands, and thus requires specialised digital tools to meet the MTD2 requirements.
The VAT compliance technology specialists
Vatglobal provides world class VAT technology, supported by global VAT specialists.
Our proprietary technology automates the VAT compliance process, eliminating human error, saving you time and slashing the administrative burden of VAT compliance.
It’s the easiest and most cost-effective way to meet your VAT obligations, including Making Tax Digital, everywhere you do business.