Businesses with taxable turnover over the VAT registration threshold of £85,000 have been required to comply with MTD VAT rules since 2019. These requirements were extended to all VAT registered businesses from their first VAT accounting period starting on, or after 1 April 2022.
Approximately 10% of businesses above the VAT threshold and 55% of businesses below it still need to sign up to MTD VAT. They should sign up for MTD VAT with HMRC as soon as possible.
To ensure compliance, HMRC is effectively making it impossible, from 1 November 2022, for most businesses to file a VAT return other than using MTD compatible software. This means that businesses will be at risk of incurring default surcharge or, from January 2023, late submission penalties and/or late payment penalties and interest.
There are understood to be a number of businesses who haven’t been able to sign-up yet due to an issue with their VAT records, and also those waiting for a response to their application for a digital exclusion exemption. Those who cannot use the online VAT return or who want to apply for an exemption, should contact HMRC as soon as possible.
The traditional online VAT return service will remain available to those with a digital exclusion exemption. Those who cannot use the online VAT return should contact HMRC. For businesses who file VAT returns annually; the online VAT return will remain available until 15 May 2023.
Find out more about Making Tax Digital
You can read more about Making Tax Digital, how to prepare your business and the exemptions available here.
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