Businesses who are required to use Making Tax Digital (MTD) for VAT but not registered could face fines of up to £400, it has been warned.
HMRC have reportedly written to over 100,000 businesses who are currently non-compliant with the changes.
Under the new rules, VAT-registered businesses with a taxable turnover above the VAT threshold (currently £85,000) are required to keep their records digitally and file a quarterly VAT return using MTD-compliant software.
At Sowerby we specialise in various types of software to ensure all our clients are using those compatible with the new HMRC portal. Across the UK, the latest research suggests that 1 in 10 businesses have yet to register for the service and therefore at risk of being reprimanded.
HMRC said failure to comply with the rules may result in a penalty of up to £400 alongside the removal of the online VAT return altogether.
This means businesses will be able to file their March to May 2021 return via the old online service but will be blocked from filing any subsequent returns in this way and therefore left with no option other than to register.
They will be blocked from filing the June/July/August 2021 return using the online VAT return and will need to sign up to MTD in good time. This will allow them to file future returns using MTD software, by 07 October 2021.
This follows a light touch taken by HMRC over the past 18 months.
Finally, due to the change over of data from HMRC’s old system to their new one, they are requesting that businesses check their Direct Debits.
Any business that pays their VAT through this method are likely to have to set it up again.
If you require any assistance with using MTD compatible software, switching over your current method of record keeping or have any questions, please call us in 01482 888820