VAT and Making Tax Digital (MTD) – Re-authorising your software

17 March 2021

Most VAT registered businesses will have been filing VAT returns using MTD compatible software for at least 18 months now, as most VAT registered traders had to enter the MTD regime from the first VAT period starting on or after 1 April 2019.

VAT and Making Tax Digital (MTD) – Re-authorising your software

When you fire-up your MTD software to submit VAT returns for the December 2020 quarter you may receive a puzzling error message. Check whether you need to re-authorise your MTD software, which may require a two-step verification process.

The requirement to reauthorise MTD software at least every 18 months is an HMRC security demand. Some software packages require a reauthorisation more frequently.

On 21 July 2020 the Government announced the mandation dates for MTD for the rest of the VAT-registered population (1 April 2022) and for businesses and landlords who pay income tax (6 April 2023). These dates will soon roll-by, so is wise to have a plan as to how to get all clients on board the MTD train.

Planning for the year end!

We are about 1 month away from the end of the 2021 income tax year.

Having just come through the filing rush for 2020 (can you tell me why many clients leave it until December/January to deal with their returns) it is now time to consider planning for the current tax year.

We have produced a Tax Planning Checklist for you to download to help you with planning to help you save tax.

There are 31 tips which could help you. Not all will be relevant but many could save you tax. Scan through the list and tick the ones which you think can provide you with tax saving opportunities.

This year with Covid having an effect on everything any tax advantage should be taken.

The list is not exhaustive and there may be other tax savings that you can make. It is intended to produce an agenda for us to discuss tax saving opportunities with you. Do not act or refrain from acting on matters without first contacting us to confirm your best course of action.

The Budget

The Budget will be held on Wednesday 3 March.

For a full breakdown of what has been announced by Rishi Sunak keep your eyes open for our budget newsletter and analysis on our web site.

VAT Reverse Charge for Construction Sector

New VAT rules are due to come into effect on 1 March 2021 which will impact on accounting for VAT for transactions in the construction sector.

All clients in the construction sector should have been sent a separate e-mail covering what is required for the new bookkeeping procedures.

If you feel you should have received the e-mail or do nit understand what you should eb doing then contact Simon for more details.

Tax return late filing penalties

In January HMRC finally bowed to pressure and agreed to relax the penalty regime for individuals who found it impossible to submit their 2019/20 SA tax return on time. If that return was submitted by 28 February no penalty notice will be raised.

However, the tax payment deadline did not change. Interest accrues at 2.6% from 1 February 2021 on any part of the tax bill paid after 31 January, even if it is paid under an agreed payment plan (time to pay arrangement).

Last week HMRC announced that Self Assessment customers will not be charged the initial 5% late payment penalty if they pay their tax or make a Time to Pay arrangement by 1 April 2021
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The payment deadline for Self Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. The deadline has not changed, but this year, because of the impact of COVID 19, HMRC is giving taxpayers more time to pay or set up a payment plan.

Payment plans or payments in full must be in place by midnight on 1 April to avoid a late payment penalty.

The self-serve Time to Pay facility allows taxpayers to spread the cost of their tax liabilities into monthly instalments until January 2022. Taxpayers can set up a payment plan online, on GOV.UK.

I wish you the best for the next month.

If you have any queries you can book a free 15 minute zoom meeting with me.

Also there is the client zoom drop in session which continues for clients at 11.00am every Wednesday.

Zoom meeting details:

Meeting URL: https://us02web.zoom.us/j/83879726978
Meeting ID: 838 7972 6978

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VAT and Making Tax Digital (MTD) – Re-authorising your software

17 March 2021

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