The government’s major Making Tax Digital programme was introduced earlier this year for over one million VAT-registered businesses earning more than £85,000 – which means most of the first VAT returns will be due about now.
The new rules, first announced in 2015, mean most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software for VAT periods starting on or after 1 April. HMRC knows businesses will require time to become familiar with the new requirements. During the first year of VAT mandation, HMRC will take a light touch approach to penalties by not issuing filing or record keeping penalties where businesses are doing their best to comply.
If you have not prepared, do not panic. 1 April was not a ‘cliff edge’ for sign-ups – the first returns under the new system for the majority of businesses, which file VAT quarterly, won’t be due until around now at the earliest.
Accountants or other tax representatives will already be aware of MTD and will advise businesses how and when they need to make changes to be ready for the new service.
Those already using software will simply need to ensure it is MTD-compatible then sign up to the new service and authorise their software for MTD.
For those who are not using an accountant or don’t currently use software, it is quick and easy to sign up and there is lots of information available to help them prepare, including about what software is available.