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Making Tax Digital

By Richard Woolgar

12th February 2021

Xero User News - How you submit your VAT return is changing

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Making Tax Digital

If your taxable turnover is over £85,000 then you should by now have signed up to Making Tax Digital (MTD) and be submitting your VAT figures using the MTD VAT return in Xero or other compatible software.

If you haven't signed up for MTD yet, then the way in which you submit your VAT Returns will change from 1 April 2021.

HMRC have announced that from this date they will no longer be supporting non-MTD VAT submissions from accounting software. 

When you open your VAT Return in Xero you will see the following message:

What you need to do

If your taxable turnover is over £85,000 then you should sign up for Making Tax Digital and follow these MTD instructions to set up MTD Returns in Xero

If your taxable turnover is below £85,000 or you are otherwise exempt from signing up then you have two options:

  1. Sign up to MTD for VAT voluntarily following the instructions above (bearing in mind that all businesses will be required to do this from April 2022 anyway).
  2. Follow the prompts in Xero to switch to the new non-MTD VAT return in Xero and complete your VAT Returns as normal.  You will then need to log on to your HMRC Government Gateway account and manually enter and submit the figures from the VAT Return.

These changes do not affect you if you have already signed up for MTD for VAT or if Armstrong Watson prepares your VAT Returns for you.

If you require any advice or assistance with the above, please do not hesitate to contact Richard Woolger on 0808 144 5575 or email help@armstrongwatson.co.uk

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