Share this content

Annual VAT reporting and MTD

What is the purpose of Annual Reporting going forward?

Didn't find your answer?

As we all know from April 2022 all VAT registered businesses should be reporting under MTD with quarterly updates.  So for those smaller clients on annual reporting I am assuming they will also fall under the quarterly reporting regime?  So then what is the benefit of having an annual VAT scheme at all, are the clients under annual VAT reporting suddenly transferred to regular VAT reporting?

Replies (12)

Please login or register to join the discussion.

avatar
By rmillaree
26th Oct 2021 13:05

"As we all know from April 2022 all VAT registered businesses should be reporting under MTD with quarterly updates. "

do we all know that ? - can you provide a link that confirms this is the case - cheers.

Thanks (0)
Replying to rmillaree:
By tracyannw
26th Oct 2021 14:46

Fair point HMRC frequently move the goalposts so it should have read 'as far as we know'....

Thanks (0)
Replying to tracyannw:
avatar
By rmillaree
26th Oct 2021 15:21

What i was trying to say was that as far as i can recall i was never aware that there would be a requirement for annual vat return companies to swap to 3 monthly submisions from 2022 - ie i think your preumption as to what we "all know" is possibly wrong - i have no certainty here though - the fact i cant remember having seen anything in that regard doesnt mean that there wasnt someguidancei have missed or forgotten.

Thanks (1)
Replying to tracyannw:
avatar
By New To Accountancy
27th Oct 2021 01:04

That was my understanding too. On 25th Oct, I've received an email from HMRC, the 'talking points' email, and it says:

Making Tax Digital for VAT: This webinar will provide some of the basics of Making Tax Digital for VAT. This will include what’s changing, using software and keeping digital records, plus an introduction to penalty reform.
From April 2022, these requirements will apply to all VAT-registered businesses, to include those that have a turnover below the VAT threshold.

So whilst they may move the goal post, it is what they (HMRC) are currently inferring.

Edit: Not quarterly mind.

Thanks (1)
avatar
By Geoff56
26th Oct 2021 13:56

I am not aware of any change to the Annual Accounting Scheme's single return for the whole year.

Thanks (0)
Jason Croke
By Jason Croke
26th Oct 2021 14:49

MTD is more about recording and maintaining digital records in accounting software or Excel with bridging software, rather than the frequency of the return. Some traders may be on monthly returns or annual returns, all MTD means is that when the time comes to file the return, be it monthly, qtrly or annually, the VAT return is submitted digitally and the data within the submission is from digital sources/links.

I think MTD IT (income tax) was looking at quarterly reporting so that may be where you are getting confused, besides, MTD for IT has been put back a couple of years.

Thanks (0)
Replying to Jason Croke:
By tracyannw
28th Oct 2021 08:38

Thanks Jason that makes sense, I was struggling the the lack of clarification because as far as i could find there was no indication either way.

Thanks (0)
RLI
By lionofludesch
26th Oct 2021 15:27

I've always shied away from Annual Accounting for VAT but I put a fella on it to delay his start of MTD for VAT and he loved it. He liked the idea of a standing order every month. Wasn't bothered about the balancing payment.

No accounting for taste.

Thanks (2)
Replying to lionofludesch:
avatar
By rmillaree
27th Oct 2021 11:51

"I've always shied away from Annual Accounting for VAT but I put a fella on it to delay his start of MTD for VAT and he loved it. He liked the idea of a standing order every month. Wasn't bothered about the balancing payment."

annual accountingworks very well for organised busy business owners who can sort out their cashflow so the swings and roundabouts ref payments doesnt really matter . so although there is potential for it to be a disaster (what do you mean i owe 15k vat now i havemade 9 monthly payments ...). Its nice to have a "few" book keeping jobs where we can just do them at a time that suits us rather than at a time when we want to be on holiday or down the pub. MTD in reverse really one annual submission job done rather than 4 and plenty of timeto get that submission sorted.

Thanks (1)
Tornado
By Tornado
26th Oct 2021 18:26

Annual Reporting, Cash Accounting, Flat Rate and other special scheme were all designed to make it easier for small businesses to reduce their record keeping, and this is exactly what most of these schemes did.

Making Tax Digital is completely the opposite and makes record keeping significantly more difficult for many small businesses. I cannot see how the two ideas can co-exist for long and I expect these special schemes to be removed in the not too distant future.

Thanks (2)
avatar
By johnhemming
27th Oct 2021 13:53

I have not heard of any suggestions of removing Annual accounting. I think I have only had one submission done on that basis with my systems, but because I don't talk to everyone that uses the system I don't know if there are any more.

Thanks (1)
RLI
By lionofludesch
27th Oct 2021 16:48

As I understand HMRC's theory, quarterly updates are to check that books are records are being kept timeously. You'd need to submit the updates quarterly, though definitely not from April 2022, maybe 2023, maybe later, but that doesn't mean you'd need to submit your VAT return quarterly.

Benefits ? Well, I would hope that being able to write up your books once a year is not seen as a benefit. You'd still have the benefit of spreading your VAT bill over the year which might be seen as valuable for a seasonal business or just from the point of view of knowing how much VAT to pay for most of the year.

Thanks (1)
Share this content