UK MTD for VAT on voluntary registrations proposal
- Mar 17, 2021 | Richard Asquith
The UK’s HMRC is considering extending the Phase II Making Tax Digital for VAT digital records and journey requirements to voluntary VAT registered business in 2022. The current plans is for phase II MTD to apply to businesses over the £85,000 VAT registration threshold only. The proposal would affect over 1 million businesses.
Digital bookkeeping obliges mandated taxpayers to hold their VAT records digitally on compatible software. And for the completion of VAT data, where this data is transferred or consolidated prior to filing via the Phase I API portal, digital links must be employed to alleviate the need for any manual intervention or data manipulation. The aim is to remove errors and miscalculations in VAT liability calculations and reporting.
MTD and its extension forms a crucial building block in the government’s 10-year strategy to make the tax system more resilient and effective, to boost business productivity, and support taxpayers.