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Making Tax Digitial is here - but don't jump the gun

by Susie Hughes at 11:44 01/04/19 (News on Business)

The Government’s major Making Tax Digital programme becomes law for over one million VAT registered businesses earning over £85,000 from today (April 1).

The new rules, first announced in 2015, will mean most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software for VAT periods starting on or after April 1. HMRC claim that MTD will make it easier for businesses to get their tax right first time and has been urging businesses to get ready. It has written to every business affected with information on what they need to do. However, survey and reports indicate that businesses are ill-prepared and in the dark about the new measure. (See: Self-employed in the dark about imminent digital tax change - Mar 2019, Shout99) 'Don't jump the gun' HMRC says that nearly 100,000 businesses have already signed up to the new service. Over 4,000 businesses are now signing up to MTD every day to experience a more integrated approach to business and tax. However, professional tax bodies, the CIOT and ATT, are warning businesses against making a false start with Making Tax Digital by signing up too early – the consequences of which, they say, can be hugely problematic for them and HMRC. While April 1, 2019 is the start date for maintaining digital accounting records, it is not the deadline to sign up to Making Tax Digital. Advertisement Adrian Rudd, from ATT/CIOT Digitalisation Working Group, said: “We are concerned at the misconception that in order to be compliant businesses must sign up to Making Tax Digital by the ‘deadline’ of April 1, 2019. This is wrong. While the requirement to maintain digital records applies to many businesses from April 1, signing up to Making Tax Digital can, and in many cases should, be done at a later date.” After a business signs up to Making Tax Digital it will no longer be able to submit VAT returns to HMRC through existing channels. Therefore, if a business which submits VAT returns on a calendar quarter basis signs up to Making Tax Digital today (April 1 2019), HMRC will expect the VAT return for the quarter ended 31 March 2019 to be submitted via Making Tax Digital software – it cannot be submitted, for example, by typing the VAT return figures into the portal. If the business has not planned for this it could have real difficulties submitting the VAT return or paying the VAT liability on time (or both), will need to work closely with HMRC to put things right, and may be at risk of penalties. Adrian Rudd said: “More than 70,000 businesses are now signed up to Making Tax Digital, the majority of which have done this themselves. We hope they have not jumped the gun, having misunderstood the requirements.” HMRC have also opened up the sign-up windows for those businesses who pay by direct debit. Previously, those businesses had to sign up 15 working days before the due date for their return. That has now been reduced to seven working days. Light touch HMRC has said that it knows businesses will require time to become familiar with the new requirements and that it will take a 'light touch' to penalties by not issuing filing or record keeping penalties where businesses are doing their best to comply with MTD in the first year. More information about MTD is available in the Government's guide: Overview of Making Tax Digital Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2019

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