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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.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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