Back in April 2019, HM Revenue and Customs (HMRC) launched an initiative called Making Tax Digital (MTD) to digitise the way businesses kept their financial records and submitted their VAT returns. This move required businesses in the UK above the VAT threshold of £85,000 to submit their VAT returns online using MTD-compatible accounting software.
Now, HMRC has mandated that all VAT-registered businesses (irrespective of their turnover) must file their VAT returns digitally through MTD from 1 April, 2022. Businesses are required to use HMRC-authorised and MTD-compatible software to keep digital records and file VAT returns.
If you are one such business looking for a transition, Zoho Books has got you covered.
How can Zoho Books help you become MTD compliant?
Recording Business Transactions
Businesses are expected to go fully digital to be MTD compliant. Zoho Books helps you do just that by enabling you to record all your business transactions on the cloud. You can record your transactions by entering them manually, importing transactions from your current software, fetching your bank feeds, or scanning your receipts.
Filing VAT Returns and Recording VAT Payments
A cornerstone of MTD is to be able to file your VAT returns online. Once you’ve recorded all your business transactions in Zoho Books, you will be able to file your VAT returns easily on a quarterly basis according to HMRC’s requirements. As soon as you file your VAT returns, you can record your VAT payments and reclaims in Zoho Books.
Comprehensive VAT Reports
Zoho Books uses all the data available in the application to generate powerful reports such as VAT returns, VAT MOSS, and OSS/IOSS scheme reports, which can all reveal a lot of insights about your business. With these reports, you can use Zoho Books as your end-to-end solution to become MTD compliant.
A good number of businesses have already started using Zoho Books to submit their VAT returns online. By going digital, those businesses were able to reduce errors and enhance productivity when it came to filing their VAT returns.
Steps to Take to Become MTD Compliant
Step 1: If you’re a business owner, you can visit GOV.UK to sign your business up for Making Tax Digital.
However, if you’re an HMRC authorised agent, you will need to create an agent services account, which is different from your HMRC’s online services for agents account. Once you do that, you can sign up your client for Making Tax Digital.
Note: You must have your MTD-compatible software ready before you sign up your business for MTD compliance.
We at Zoho recognise that businesses face a number of upfront expenses to become MTD compatible. As a way of giving a head start to businesses that are getting ready for MTD, Zoho Books is offering a 50% discount for the first-time purchase of our yearly plan. This offer is applicable only if you subscribe to Zoho Books on or before May 31, 2022. You can choose a plan to fit your business requirements from the variety of plans that Zoho offers.
Step 2: Once you sign up for Making Tax Digital for VAT, you can start recording your business transactions for the VAT period.
Once you complete these steps, you’ll now be ready for HMRC’s Making Tax Digital for VAT. For more information on Making Tax Digital for VAT, you can visit our page for MTD.
If you have any questions or require any clarification, please feel free to leave a comment below or write to us at firstname.lastname@example.org.