April 2022
MTD is being extended.
Stay compliant and
avoid penalties.

Supporting you through the latest MTD changes

From 1st April 2022, HMRC are extending the scope of MTD(VAT) by including VAT registered businesses below the VAT threshold (previously exempt) and fully implementing the digital links requirements of MTD for VAT. This means that all VAT submissions, even if you are under the current £85,000 turnover threshold, must be made using an MTD compatible platform.

Here, we have compiled useful resources for you to better understand the latest rules, how they affect your business, and what we can do to make the move to digital VAT as seamless as possible.

We wanted to get ahead of the game and ensure we were ready before the HMRC deadline. We have found it to be user-friendly, and we’re now working more proactively to simplify our farm accounts. For example, we can now easily put our invoices through the system rather than uploading them in bulk every quarter. This approach really takes the pressure off the team.

Andrew Nicholls of H Snelson & Son Ltd.

I was very impressed at how HMRC and Farmplan collaborated to make the system work. I was Farmplan’s second client to submit a business VAT return using the new system and I found it so easy that I set up all my clients on it in early 2019.

Jennifer Day, Mobile Farm Administrator

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Does this affect me?

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

Penalties

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

What can I do?

You should now be using MTD compatible software like Farmplan Business CloudLearn more here >>

The benefits of going digital

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

I was very impressed at how HMRC and Farmplan collaborated to make the system work. I was Farmplan’s second client to submit a business VAT return using the new system and I found it so easy that I set up all my clients on it in early 2019.

Jennifer Day, Mobile Farm Administrator

We’ve found that once reluctant adopters move across to our Business & Accounts software, they are surprised by lots of hidden benefits. From easing cash flow management to analysing business performance. And now with the Making Tax Digital functionality, customers can comply with the new regulations without any difficulty at all.

Anne Cianchi, Product Manager at Farmplan.

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 1st 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 1st 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

Our team are here to help. Get in touch today

Farmplan is an agent of Plaid Financial Ltd., an authorised payment institution regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 (Firm Reference Number: 804718). Plaid provides you with regulated account information services through Farmplan as its agent.