Businesses have less than one month left before they will only be able to use a Making Tax Digital compatible software to keep VAT records and file returns with HMRC.
From 1st November, businesses will no longer be able to use their existing VAT online accounts to submit quarterly and monthly returns. The shift aims to help reduce errors in tax affairs through use of digital tools, and help businesses grow by freeing up time spent on returns.
More than 1.8 million businesses are already using Making Tax Digital, and have successfully submitted a total of 19 million VAT returns.
If businesses do not file their VAT returns through MTD-compatible software, unless exempt, they may have to pay a penalty. Even if a business currently keeps digital records, they must check their software is MTD compatible and sign up for MTD before filing their next return.
Richard Fuller MP, Economic Secretary to the Treasury, said:
“Making Tax Digital can help businesses get their tax right first time, which cuts the administration burden and frees up time for them to get on with what matters most to them – growing their business.
“I encourage any VAT-registered businesses still to register for Making Tax Digital to get online and sign up.”
If a business hasn’t already signed up to MTD or started using compatible software, they must follow these steps now:
- choose MTD-compatible software – a list of software, including free and low-cost options, can be found on GOV.UK
- check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’
- keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK
- sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.UK and search ‘record VAT’
If a business is already exempt from filing VAT returns online or if their business is subject to an insolvency procedure, they will automatically be exempt.
A business can check if they can apply for an exemption from MTD on GOV???.UK if it is not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.
If a business is new and is not yet registered for VAT, they will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS). Registering via this online service not only means a faster VAT registration and improved security, but also helps new businesses to be fully compliant with MTD requirements from Day 1 – although they will still need to get the right software to submit their VAT returns.
A range of accessible help is available online through GOV.UK, webinars and videos as well as through HMRC’s Extra Support Service. Thousands of people have also benefitted from HMRC’s live webinars, which offer support on filing digitally and explain how it can help businesses. HMRC?is continuing to communicate directly with businesses and agents to support them as they transition to MTD for VAT.
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