For most VAT registered businesses with a turnover in excess of £85,000 the first phase of the new, compulsory way of filing VAT Returns, has been introduced – so what now?
In principle the VAT return, submitted to HMRC, itself is the same, it’s the mechanism for filing that has changed as you can no longer use your old government gateway to submit the VAT return. So what’s next:
- The remaining 40,000 VAT registered businesses (groups and charities), with a turnover above the £85,000 threshold must ensure they are fully compliant before the end of the six month deferral process. Click here for the list of those who are eligible to defer.
- HMRC are introducing a penalty regime meaning they can charge up to £400 for not filing a VAT return under Making Tax Digital (MTD). Thankfully there is a ‘soft landing’ on these penalties for the first 12 months, but only in certain circumstances so it is in your interest to make sure you are compliant immediately.
- There are plans to extend MTD to both Income Tax and Corporation Tax. In fact there is currently a pilot system in operation covering Income Tax. These further changes were scheduled to be implemented in April 2020, however it has recently been announced that other than the MTD for VAT (mentioned above), other mandated changes will not happen during 2020.
This is the first step of many to encourage digital record keeping and online filing of tax returns to help reduce the risk of errors in submissions. We are helping our clients to transition to these new requirements, often involving the use of cloud accounting software, which has identified the wider benefit of using the technology. Our clients are now saving huge amounts of time and resource and have instant access to accurate financial information in real time helping decision making and planning for the challenges they face.