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Update on the extension of MTD for VAT

Update on the extension of MTD for VAT
Smaller VAT businesses, those registered below the VAT threshold, will be required to operate Making Tax Digital (MTD) for their VAT reporting and record keeping obligations from 1 April 2022.
In July 2020, the government announced that it would extend MTD to VAT registered businesses with taxable turnover below the VAT threshold (£85,000). This extension builds on the successful introduction of MTD for VAT-registered businesses with turnover above the threshold in 2019.
Legislation has now been laid in Parliament – The Value Added Tax (Amendment) Regulations 2021 – to bring this extension into effect.
HMRC’s Making Tax Digital Director, Giles McCallum, said: “This is an important step in extending MTD and progressing the delivery of a modern, digital tax system, supporting the digitalisation of the UK and making it easier for businesses to get their tax right with an improved customer experience.”
These changes will apply to around 1.1 million VAT registered businesses with taxable turnover below the current VAT threshold. About a quarter of these VAT registered businesses below the VAT threshold have voluntarily chosen to join MTD, which HMRC says demonstrates that a modern, digital approach to managing tax can work for businesses of every size.

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