Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules. Those rules require the business to keep digital business records and send VAT returns using MTD-compatible software.
MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some traders who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT. If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets.
There is however a £1,000 de-minimis which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.
Unfortunately, deregistering for VAT will not necessarily sidestep MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023. From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.
Growing businesses often don’t have the time or the resources to set up a full accounting function within the business. That’s why, at BM Connect, a Beavis Morgan group business, we offer integrated, flexible and affordable outsourced bookkeeping, accounting and payroll solutions which are tech-enabled, giving you real-time visibility into your business and delivering value cost-effectively and efficiently.
In turn, if you have any concerns regarding your tax return or other related matters, our experts at Beavis Morgan are readily available to assist. We take the hassle of dealing with HMRC away from you, so you don’t need to deal directly with them.
Contact Mariske Byrnes at BM Connect, or your usual Beavis Morgan Partner for further information and assistance.