VAT registered businesses will need to keep digital records and submit VAT returns online under changes coming into effect under the government’s Making Tax Digital initiative. Firms will have until the 1st April 2022 to sign up to the service with those that fail to comply facing penalties and fines. The changes impact even small business owners with turnover of less than £85,000.
HMRC have sent reminders to all firms in scope of the MTD expansion, and the department is also hosting a series of webinars to help small business owners get up to speed with the requirements of the digital system. However despite this, in January 2022 only a third of those required to register had done so.
A spokesperson from the Federation of Small Businesses said; “It’s important that firms do all they can to get ahead of deadlines and access the affordable platforms that are now available… we will continue to work with government to minimise the admin and cost impacts of Making Tax Digital on small firms.”
Support is also available from accountancy firms who specialise in finding solutions for small businesses to streamline their processes. Andrew from Arcus said; “Making Tax Digital can offer opportunities for firms to become more productive. By investing in a cloud based accounting system such as Xero (which is approved by HMRC) our clients are much more able to keep on top of their sales and costs. With our training and support, many clients agree that the move to digital accounting and reporting brings real benefits in the long term.”