Making Tax Digital came into force in March 2019 for UK VAT registered businesses with turnover in excess of £85,000. Since then, the vast majority have signed up and are submitting their VAT Returns digitally through compatible software. There are however still a minority of businesses who have yet to make the change.
In August 2019 HMRC sent more than 100,000 warning letters to businesses who had failed to comply with the first quarterly deadline. These numbers are falling but thousands of such letters are still being issued each month to businesses who are not submitting their VAT Returns through HMRC’s MTD portal.
In recognition of the challenges faced by business in preparing for MTD and the uncertainties around Brexit, HMRC have thus far refrained from issuing penalties. As we approach the anniversary of the rollout of MTD, this leniency should not be expected to continue.
It is worth remembering that Making Tax Digital had 3 main requirements:
HMRC had said that they would take a soft touch approach to penalties in the first twelve months but this was only intended to be in respect of the last of these points.
Time is running out for those businesses that are either yet to register for Making Tax Digital or who are not fully complying with these three requirements.
Armstrong Watson have been preparing our clients for Making Tax Digital for over five years. An integral part of this has been the migration to cloud accounting software, in particular the market leading Xero.
With over half a million UK users, Xero is the fastest growing and most user friendly software on the market and is fully MTD compliant.
The level of automation it offers combined with the ability to integrate with over 700 third party apps makes it a flexible and powerful tool for businesses of all sizes.
Our dedicated on-boarding team has helped thousands of our clients move their accounts to Xero, optimising the software to save them time and giving them real time financial information to put them in control of their business.