Making Tax Digital update – Businesses urged to register before August deadline
HMRC reveals many businesses yet to sign up, including 75% of businesses in the financial sector
Any businesses with an annual turnover above £85,000 who have not already signed up for Making Tax Digital (MTD) are being urged by HM Revenue and Customs (HMRC) to do so before the 7 August 2019 VAT filing date.
HMRC estimate that 1.2 million businesses in the UK are affected by the MTD rules, which became law for VAT periods starting on or after 1 April 2019. Most of these will be required to submit their first quarterly VAT return to HMRC by the 7 August 2019 digitally. If paying by Direct Debit, you must register by 29 July 2019.
Across all business sectors, between 50% and 75% are still yet to sign up. Businesses will require MTD-compatible software and a pre-MTD Direct Debit will be required to come out of your bank account before signing up.
The MTD rules became law for VAT periods starting on or after 1 April 2019. This necessitates most VAT-registered businesses (with taxable turnover over £85,000) to keep their VAT records digitally and to submit their VAT return direct from MTD-compatible software.
Penalties for non-compliance
HMRC understands that businesses will need time to become familiar with the new requirements of MTD. During the first year of mandation, it will not issue filing or record keeping penalties where businesses are doing their best to comply. Sanctions will remain in cases of deliberate non-compliance, and in order to safeguard VAT revenue.
Exemptions and voluntary opt-in
HMRC expect that most customers will be able to meet the legal obligations of Making Tax Digital but accept that in some circumstances, it may not be possible for a small number of businesses to do so.
Reasons can include if it is not reasonably practicable for you to use digital tools to keep your business records or submit your VAT Returns because of age, disability, remoteness of location or for a small number of other reasons.
If you are exempt from Making Tax Digital because your taxable turnover is below the VAT registration threshold you may still opt to submit online through Making Tax Digital, which may be of benefit to many smaller companies.
In order to do this, you are required to tell HMRC that you need to sign up for Making Tax Digital for VAT. Once you sign up you will have to file your VAT Return digitally using compatible software.
In both circumstances, we can advise on whether you may be exempt or if it would be advantageous for you to voluntarily opt-in to Making Tax Digital.
How we can help
Contact Alexander & Co today and we can advise if you need to be registered before the deadline and if required, how best to become compliant.
Our team of accountants are experienced with the new Making Tax Digital scheme and can help you to get your accounts set up and ready for the switch.
If you are not confident with digital software, we can help you navigate your accounting tools and help you submit your tax returns online. Most digital accounting software will have an MTD feature built-in, making it easier to submit the required information to HMRC.
If you are looking to make the switch to digital accounting, we can advise on the best options available to suit your needs. To get in touch, you can call us on 0161 832 4841 or email firstname.lastname@example.org. Alternatively, fill out the form below and we’ll be in touch promptly.