Most VAT-registered businesses have been required to comply with the Making Tax Digital (MTD) regulations for VAT since 1 April 2019. Until now, HMRC has taken a soft approach to those who have not switched to submitting VAT returns using MTD-compliant software, but that is changing.
Around 800 businesses have been told that they will have to file VAT returns using MTD software from 8 July 2021, as the old VAT portal will be closed to them. If the response to this pilot letter is positive, HMRC will write to the rest of the 100,000 MTD refuseniks, telling them they have no choice but to convert to MTD filing for VAT.
Businesses that are voluntarily registered for VAT, as their turnover has never exceeded £85,000, will be required to file VAT returns using MTD from 1 April 2022. These businesses should not be chased by HMRC to join MTD just yet. The MTD regulations require that the VAT data flow through the accounting system without manual intervention, such as re-typing or copying and pasting figures.
If your system still contains these manual breaks, they need to be replaced by digital links without delay.
If you need to sign up for MTD, please speak to us beforehand, as there are steps that we need to undertake as your tax agent.
REF: HMRC targets businesses not using MTD