What are the rules?

If you conduct any VAT submissions, irrespective of turnover, these rules apply to you.

All UK VAT registered businesses must keep and maintain VAT records digitally in “a compatible software package that allows you to keep digital records and submit VAT Returns” or use “bridging software to connect non-compatible software (like spreadsheets) to HMRC systems”.

This now applies to all businesses who conduct VAT submissions, even if you have voluntarily registered for VAT.

This digital record keeping requirement is compulsory for all VAT periods beginning on or after 1^st April 2022. 

Digital Links

Under MTD a business is required to keep digital records of all the transactions which make up the figures reported in the VAT return. Where more than one system is used to record these transactions, the systems need to be linked digitally, so that data is not manually moved or combined before submission.

Digital Links mean that the process of keeping farm accounts must be kept using an approved computerised method. 

Digital should NOT involve:

• ‘Cut and paste’ methods of moving data
• Any manual modifications of data

Please note:

Bridging software will now only be allowed where there has been no manual manipulation of the data recorded.

Penalties

From 1^st April 2022, failure to adhere to these regulations will put your business at risk of penalties. 

The penalties will apply to the first completed VAT return on or after this date, and will now also apply to all VAT registered users, not just net payers. It is therefore important that you understand your obligations and ensure you are fully compliant from the 1st April 2022.

What can I do?

Speak with our team today. We were proud to support our customers through the initial stages of MTD, and we are here to support you through these latest obligations.

By using compatible accountancy software, such as Farmplan Business Cloud, you have a secure connection with HMRC systems allowing you to submit the relevant figures to calculate your VAT payments at a click of a button.

It’s then a simple 3 step process:

1. For Business Manager, check that your software is the latest version to ensure it includes all the current MTD legislation. If you’re using Farmplan Business Cloud, your program will be automatically set-up and ready to go!
2. Sign up to MTD on the HMRC website
3. Once HMRC confirms you’re signed up, go back into your accounts software and finish the set-up.

The hidden benefits

In April 2022, MTD compliance will be mandatory for ALL VAT registered businesses. 

But there are many benefits to ditching paper-based or manual systems in favour of digital record keeping.

1. MTD compliance
2. Better understanding of your business
3. Easier cash flow management
4. Instant access to data
5. Less risk of error