If you haven’t already registered for MTD then make sure you do as soon as possible to avoid being fined!
Most VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use the Making Tax Digital (MTD) service to keep records digitally and use software to submit their VAT Returns.
Making Tax Digital is a new initiative as part of the government’s plan to make it easier for individuals and businesses to get their tax right. Businesses with an annual taxable turnover of £85,000 or more will be required to keep digital records for all VAT transactions from 1st April 2019, which must then be submitted to HMRC using compatible software on a quarterly basis.
HMRC’s aim is to make tax administration more effective, efficient and easier for taxpayers.
What to do if you missed the deadline?
3,800 businesses in the UK missed the 7th August deadline, if you are one of them don’t worry, you still have time to comply. If you are registered to pay HMRC by direct debit and were due to file your first MTD VAT return by 7th August but missed the deadline then you will need to file your VAT using your current method, once your Direct Debit has been collected from your bank account you can register for MTD for VAT. Now you need to authorise your software with HMRC, this process will vary depending on which software you are using, please consult with your software provider. Once you have followed these steps you should be ready to submit your MTD VAT return for the September quarter.
HMRC are not issuing penalties and surcharges to businesses which “try their best” to comply, so it’s vital to take proactive steps if a deadline has been missed. This does not mean that penalties won’t be issued for late submission, it will be left down to HMRC’s discretion as to whether they think you are trying your best to compy.
Some businesses are not required to sign up for MTD as they are part of a deferral group. If you are part of the deferral group HMRC would have written to you to inform you. If your business is in the deferral group, follow the rules from your first VAT Return period starting on or after 1 October 2019.
If your business uses the VAT GIANT service, you cannot sign up for Making Tax Digital yet. HMRC will contact you to tell you when the deadline is.
You might be exempt if you:
cannot use computers, software or the internet because of your age, a disability or where you live
object to using computers on religious grounds
You’re automatically exempt and do not need to apply if:
you’re already exempt from filing VAT Returns online
your taxable turnover is below £85,000 (although you may still register if you wish to do so)
you or your business are subject to an insolvency procedure
What’s next for Making Tax Digital
Now that MTD for VAT is live and businesses are using the service to file their VAT returns HMRC is beginning to look ahead to MTD for Income Tax. Whilst there is no date set for MTD for Income Tax many businesses are preparing early to get ahead of the game. HMRC have a live pilot of the software for businesses and agents to keep digital records and send updates to HMRC. If you are self-employed or a landlord you are able to use this software instead of filling out a self-assessment tax return.
If you start to use the software you will be able to see an estimate of how much tax you might owe as you go, rather than waiting until the end of the tax year.
By signing up to HMRC’s secure service, you’re helping HMRC test a new way of working out your tax as part of the Making Tax Digital pilot.
You could qualify to sign up to Making Tax Digital if:
you’re a sole trader with income from one business, you rent out UK property or both
your Self Assessment tax returns and payments are up to date
you’re resident in the UK for tax
You’ll not be able to take part if you need to report:
income from any other sources
any other payments you make that are taxable or that you claim tax relief on
If you need any help or guidance with Making Tax Digital, please email us at firstname.lastname@example.org, or call us on 01332 238833