Last year it was announced that there will be changes to how VAT returns are submitted for those under the VAT threshold who are voluntarily registered.
This new change will come into force from 1 April 2021 and will encourage many voluntarily registered businesses to make the transition to Making Tax Digital (MTD) sooner, even though there is no legal requirement for them to sign up until April 2022.
Under these new rules, HMRC will bring to an end the current VAT mainframe for return submissions and businesses that are not signed up to MTD will have two options:
1. Submit VAT returns yourself through your Business Tax Account; or
2. Continue to use an agent to file your returns from April 2021, however, you must sign up to MTD and comply with all the MTD rules in place.
This means using VAT XML to file VAT returns will no longer be an option from April, as it is incompatible, and businesses will need to change their procedures.
HMRC has also announced that from April 2023 the majority of unincorporated businesses and landlords who submit Self-Assessment returns and have annual gross income from a business or property of £10,000 or more per year will be required to join MTD.
For more information on the upcoming requirements for MTD, please contact your usual Milsted Langdon contact or click here.