Businesses are being told to prioritise paying VAT on time to avoid penalties under new Making Tax Digital (MTD) rules.
HM Revenue & Customs (HMRC) has told firms that if they are struggling to file their returns, they need to prioritise paying VAT on time to avoid any penalties.
Any business that signed up early for MTD may have signed up before filing their Q1 2019 VAT returns, which are the final ‘non-digital’ VAT returns (i.e. VAT returns ending either 31 March 2019 / 30 April 2019 / 31 May 2019).
However, this means that their Q1 VAT returns must be filed under the new MTD rules, and this requires the business to update their systems before the Q1 VAT returns deadline.
Making Tax Digital was officially introduced on 1 April 2019, but this was not the deadline for enrolling onto the system.
HMRC has said that it will apply a ‘light touch’ approach in the first year of Making Tax Digital, specifically in cases where the business has made genuine efforts to comply with the new rules. It said, “If they join (MTD) early and then face difficulty complying we have committed to taking a light touch approach to filing and record keeping penalties.”
Jon Stride, the co-chair of the Association of Taxation Technicians technical steering group, said: “Once a business has signed up to Making Tax Digital it must submit all VAT returns – including those for periods starting before 1 April 2019, using Making Tax Digital-compliant software.
“This could cause problems if the business signs up to MTD before submitting its final return under the pre-Making Tax Digital rules.”
If you haven’t already started on your MTD journey, now is the time to act. To find out more about how Smailes Goldie Group can help you with online accounting and Making Tax Digital or if you wish to attend our Cloud Accounting seminars available, please contact us today on 01482 326916 or email our MTD expert Peter Dearing at email@example.com
Smailes Goldie Group
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