With the advent of HMRC’s Making Tax Digital (MTD) initiative, it is vital that traders keep on top of the changes. For VAT-registered businesses, certain changes have already come into effect and must be adhered to. As a result of all these developments, though, you might find yourself wondering how best to file a VAT Return, or which VAT bridging software to use. In this article, we explain a quick and cost-effective way to complete your quarterly VAT submission.

Making Tax Digital

Making Tax Digital (MTD) refers to HMRC’s ongoing efforts to digitalise the UK’s tax system. One of the key aims is to simplify the tax-collection process, thereby reducing error and increasing efficiency. It is hoped that this will ultimately improve the so-called “tax gap” and will benefit public services.

Digital changes

However, any shift in the system will unsurprisingly require a change in the ground-level process for businesses (as well as requiring a shift in mentality!). Setting aside businesses which have applied for and received exemptions, MTD changes for VAT are already in effect:

  • Business records must be stored digitally
  • VAT Returns must be filed online
  • VAT Returns must be filed every 3 months

Filing Your VAT Return

In typical circumstances, VAT-registered businesses are expected to file a VAT Return every 3 months (referred to as the “accounting period”). Unless you have applied for an MTD exemption or joined the VAT Annual Accounting Scheme, there are two main ways to submit your quarterly VAT Return:

  • Use compatible software (such as AbraTax)
  • Employ an agent (such as an accountant or tax advisor)

MTD-compatible software

Whereas appointing an agent to deal with your bookkeeping and tax returns can be expensive, a more cost-effective option is to use MTD-compatible software to help you to submit your own VAT Return. Since you are already required to maintain your accounts digitally, this option is also likely to save you a considerable amount of time and effort.

VAT bridging software

Bridging software, such as AbraTax, provides a simple solution for connecting your records with the HMRC system. Since you are already maintaining your financial records digitally, e.g. in an Excel spreadsheet, this is a super simple option requiring only a few short steps:

  1. 1. Connect your VAT registration to AbraTax
  2. 2. Download our VAT template (for Excel)
  3. 3. Link 7 cells from your records to the template
  4. 4. Upload the template to AbraTax for submission

After submitting your VAT Return through AbraTax, our HMRC-recognised software, you will receive instant confirmation and an official HMRC receipt-ID. In a matter of minutes, you can take care of your tax – and AbraTax will even calculate some of your VAT figures automatically! It’s as simple as that!

Conclusion

Despite causing significant shift in business practices, the Making Tax Digital initiative has made great strides in improving on previously complicated paper-based systems. Although a VAT Return is now required every quarter, the new system allows for the use of handy and affordable digital services such as AbraTax, which can help to make your VAT Returns faster and smoother than ever before. Why not sign up and try our service for free today?

Disclaimer: We aim to offer educational articles on our blog, focusing on tax-related topics. However, it's important to note that over time, the relevancy of this content might diminish, and we cannot guarantee accuracy. While these articles serve as a tool for enhancing tax knowledge, they are not a replacement for expert advice in accounting, taxation, or legal matters, given the unique nature of each individual's situation. Should you require personalized assistance, we encourage contacting HM Revenue and Customs (HMRC).