Get Making Tax Digital (MTD) Sorted

Making Tax Digital (MTD) has been introduced by the UK government to digitise the business taxation process. The new MTD rules mean you can no longer submit VAT returns in the same way as before.

The purpose of implementing MTD is to make the system of filing taxes easier and more efficient for individual taxpayers and businesses. From April 1, 2022, it is mandatory for all VAT-registered businesses to sign up for Making Tax Digital.

This new rule affects thousands of VAT Registered sole traders and small businesses, with an annual taxable turnover less than the VAT threshold. Previously, if a business was VAT registered and earning over £85k then they would have to, now as of April 2022, every VAT registered business has to do this.

After April 1, small businesses in the UK can no longer submit VAT returns manually through HMRC online. According to the new MTD rules businesses need to maintain their VAT records in a digital format, and must include your VAT registration information: records, by capturing the information listed below:

• Your business name;
• Your business description;
• Your company’s primary office address;
• VAT registration number;
• Records of any common VAT accounting schemes that your company might be using.

You must also keep digital records of all sales and purchases for your company, including invoices, sales values, and VAT rates. The Osome app maintains these records for you automatically.

If you are a VAT-registered business and have not yet signed up for MTD, you must do this as soon as possible to avoid any penalties. Have not already registered your business for VATBy registering you can reclaim VAT on items purchased for business purposes.

Many businesses in the UK are voluntarily registered since it makes their business records appear more compliant and more professional.

After completing your initial VAT return for the first time you can sign up for MTD for VAT.

You have to share all of your accounting records through your MTD-compliant software, updating HMRC on your records quarterly, a milestone-based system. As well as VAT returns and payment deadline.

To register for MTD, once you have are already voluntary registered for VAT, you will need to gather the following information:

• The email address of your business.
• VAT registration number.
• The registration and Unique Taxpayer Reference (UTR) if registered as a Limited Liability Partnership or a Limited Company
• The latest VAT Return.
• The Government Gateway ID you are using for your business.
• The National Insurance number in case you have a sole trading business.

Before signing up to MTD, you need to be using the correct MTD-compliant software. Software API must be able to talk to HMRc systems, to submit through the HMRC portal. Osome is unique because we combine the three facets of MTD into one package, we have accountants and software, with Osome you don’t have to think about it.

Subsequently, you sign up for MTD by clicking «Register» on the GOV.UK website and then answer the questions regarding the information listed in the previous section.

Please note that you need to be careful when signing up to avoid accidentally paying double amounts for the current VAT return.

Remember that you should not register less than seven days before your pending VAT Return, or less than five days after your outstanding VAT Return.

You will receive a confirmation from HMRC within three days of registration.

Make sure to activate the MTD for VAT features in your accounting software application after you get to know your registration details from HMRC.

The activation of the software application will not happen automatically. Talk to your software vendor if you are not sure how to proceed.

The Making Tax Digital (MTD) came into force on April 1, 2022. After this date, all VAT-registered businesses need to store their VAT records digitally, using a compatible software application.