Deadline looms over Making Tax Digital for VAT
Businesses are being warned that they could face tough penalties from HMRC if they miss the deadline to submit monthly or quarterly VAT returns using its online portal.
HMRC has confirmed that it will close the online VAT services facility on Tuesday 1 November 2022 – this means that if businesses do not file their VAT returns under the Making Tax Digital for VAT rules by this date using compatible software, they could be hit with substantial fines and interest.
For those businesses that don’t comply in time, HMRC may charge up to £400 for every VAT return that is not filed in this way and on top of that, you could be charged a penalty of between £5 and £15 for every day that digital records are not kept, or digital links are not used.
At Westcotts, we are urging businesses to take action now to avoid being caught out, as there will be no alternative method of submitting the returns if they do not meet the deadline.
The portal will, however, stay open for digitally excluded businesses – those that have agreed exemption from Making Tax Digital for VAT with HMRC. Businesses that file annual VAT returns will still be able to use the portal until May 2023.
Making Tax Digital (MTD) is the Government’s initiative to move the UK to a fully digital tax system and is the biggest change to the tax system in decades. Under MTD, tax payers will need to keep digital records and use MTD compliant software to electronically file tax information.
From 1 April this year, it became mandatory for all businesses to sign-up and submit their returns under MTD for VAT. HMRC said; “It is designed to help businesses eliminate common errors and save time managing their tax affairs.”
Despite this requirement, it is understood that a large number of businesses have not taken steps to engage in the process. If your business has not registered yet, it is crucial that you do so as soon as possible.
Making Tax Digital for VAT requires VAT registered businesses to keep records digitally and file VAT returns using software that ‘communicates’ with HMRC digitally. You can listen to our special podcast that we produced earlier this year – it gives you plenty of guidance on what you need to do to comply with the rules.
If you have any concerns about the changes or would like further information or advice, including advice on the ‘Help to Grow Digital Scheme’ that may allow a discount of up to 50% discount on the purchase of compatible software, please contact me or your usual point of contact at Westcotts. Details about Making Tax Digital can also be found on our website.