In a recent update from HMRC, it was announced that there will be a change in how VAT returns are submitted for those under the VAT threshold who are voluntarily registered. This is set to come into force from April 2021.
There is no legal requirement for voluntarily registered businesses to sign up to MTD until 1 April 2022, but the planned changes below will encourage many businesses to make the transition sooner than planned.
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 as it is incompatible, and a change will be required from April 2021.
HMRC has also announced that from April 2023 the majority of unincorporated businesses and landlords who submit Income Tax Self-Assessment returns and have annual gross income from business or property sources of £10,000 or more per year will be required to join MTD.
For more information on the requirements for MTD please contact your usual Milsted Langdon contact or click here.