As part of their scheme to increase VAT registration efficiency, HM Revenue & Customs (HMRC) is attempting to make the process entirely digital.
This fits in with the Government’s overall policy of Making Tax Digital (MTD) and the specific policy of MTD for VAT.
Currently, over 95 per cent of businesses use HMRC’s online VAT Registration Service (VRS) for VAT applications but HMRC aims to increase this percentage in the next few years to almost 100 per cent.
What is MTD for VAT?
MTD for VAT is a UK Government initiative aimed at modernising the tax system, making it easier for businesses to keep track of their tax affairs and submit VAT returns online.
Businesses with a taxable turnover above the VAT threshold (£85,000) are required to keep digital records and submit VAT returns using MTD-compatible software.
The move to MTD for VAT aims to reduce errors, improve efficiency, and streamline the tax reporting process for businesses but it can be a complicated process to get used to so speaking to your accountant is always advised.
Who can submit paper VAT returns?
Going forward, a business can file a paper form when they have a ‘reasonable excuse’ (as outlined by the Government) or they are filing in Welsh.
Certain businesses and taxpayers exempt from online applications will still be able to apply via post using the paper VAT1 form.
To obtain this form, they will need to contact the VAT helpline. HMRC will then inquire about the reason for opting for postal application, but businesses won’t need to secure an exemption beforehand.
How to manage the transition to paperless taxation
Managing your business’s transition and keeping compliant with MTD for VAT requires a few key considerations.
To avoid penalties and remain compliant with the constantly changing regulatory landscape it is best to consult with an experienced accountant.
A qualified financial expert can guide you in the right direction when it comes to MTD for VAT and ensure that your business files tax returns on time, accurately and efficiently.
To remove the stress from your shoulders, contact one of our experts today and ask them about MTD for VAT.