Your clients must file their next quarterly or monthly VAT return using MTD-compatible software

Dear customer,

I’m writing to let you know that from‌‌‌ ‌‌Tuesday 1‌‌‌ ‌‌November 2022, your clients will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns.

Businesses that file annual VAT returns will still be able to use their VAT online account until 15‌‌‌ ‌‌May 2023.

By law, VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

If your clients do not sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty. The best way for businesses to avoid penalties is to start using MTD now.

Even if your clients already use MTD-compatible software to keep their records and file their VAT returns online, don’t forget they must sign up to MTD before they file their next return.

What businesses need to do now, or they could face a penalty

If your clients haven’t signed up to MTD and started using compatible software already, they must follow these steps now:

Step 1. Choose MTD-compatible software that’s right for them – you can find a list of software on GOV.‌‌‌UK.

Step 2. Check the permissions in their software – once they’ve allowed it to work with MTD, they can file their VAT returns easily. Go to GOV.‌‌‌UK and search ‘manage permissions for tax software’ for information on how your clients should do this.

Step 3. Keep digital records for their current and future VAT returns – you can find out what records they need to keep on GOV.‌‌‌UK.

Step 4. Sign up for MTD and file their future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.‌‌‌UK and search ‘record VAT’.

Your clients who file quarterly or monthly VAT returns must complete these steps in order to file their returns due after 1‌‌‌ ‌‌November.

How to apply for an exemption from using software

If your clients are already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they’re automatically exempt.

Your client can check if they can apply for an exemption on GOV.‌‌‌UK, if it’s not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.

Help and support avaliable

You can find more information on how to support your clients on GOV.‌‌‌UK, including a step-by-step guide to signing up for MTD on your clients’ behalf.

Businesses may be able to get a discount on software through the UK Government’s ‘Help to Grow: Digital scheme’, which offers 50% off compatible digital accounting software.

You can signpost your clients to help and support for MTD on GOV.‌‌‌UK, where they can find useful videos, register for live webinars, and see the latest guidance and updates on MTD for VAT.

Protect yourself and your information

Never share your HMRC sign-in details. Someone using them could steal from you or make a fraudulent claim in your name.

If someone contacts you saying they’re from HMRC and wants you to transfer money urgently or give personal information, never let yourself be rushed. Take your time and check HMRC’s advice about scams on GOV.‌‌‌UK.

Yours faithfully

Jim Harra

Chief Executive and First Permanent Secretary – HMRC


Author: Lisa Thompson
Published on:

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