No matter the size of your company’s turnover, if you’re registered for VAT you must now register to file returns online as part of the UK Government’s Making Tax Digital scheme.

If you haven’t signed up to Making Tax Digital for VAT already, this article will take you through the steps you’ll need to follow to make sure you comply with the new system.

Switching to Making Tax Digital for VAT allows you (or your accountant/agent) to:

• keep digital records of all VAT-related documentation, including –
  • invoices sent and received;
  • your VAT registration details;
  • details of goods bought and sold;
  • time and value of supply;
  • adjustments and other items
• submit your VAT returns online – it’s important to note this requires compatible software. If, when you check this aspect on the tax portal, it appears you don’t have the right software you can install some from an approved Government supplier like Cashflow Manager.

What you’ll need to sign up to Making Tax Digital for VAT

Before you visit the Making Tax Digital for VAT registration page you’ll need to have a few pieces of information to hand.

Firstly, your business email address (simple enough).

Secondly, a Government Gateway user ID (which you can create when you use this service, if you don’t already have one) and password.

Thirdly, your VAT registration number and latest VAT return.

The self-service portal will ask a series of questions, such as how many VAT-registered businesses you run, and what fields they operate in.

Depending on how your business is set up, there are some other points to bear in mind. If you are a:

• sole trader, you’ll also need to provide your National Insurance number
• limited company or registered society, your company registration number and Unique Taxpayer Reference (UTR) will be required
• general partnership and you’re registered for Self Assessment, your UTR and postcode are needed
• limited partnership, have your UTR, Self Assessment registered postcode and company registration number to hand

When to apply to pay VAT digitally through MTD

Timing is the final piece of the puzzle. The most important thing to be aware of is that if you pay VAT by Direct Debit at present, don’t sign up for Making Tax Digital for VAT close to that date – or you may pay twice.

The advice from the Government’s tax portal is that to prevent duplication, only sign up:

• more than seven days before your return is due
• more than five days after your return is due

However, if you don’t pay by Direct Debit then you should register more than three days before your return’s due.

You’re all set, and you should receive a confirmation email within three days of signing up. Remember to check your spam folder if it hasn’t appeared (or contact HMRC) – and don’t submit a VAT return until it arrives.

For further details of records that must be kept digitally for businesses registered with Making Tax Digital for VAT, visit the Government’s VAT portal or watch this video for tips. There is also a series of webinars to help new registered users. Cashflow Manager is a registered MTD for VAT-enabled solution.

Related articles:

• A complete guide to VAT for small businesses
• The benefits of signing up for VAT