HM Revenue & Customs (HMRC) has warned that registration for Making Tax Digital (MTD) for VAT will take up to seven days to complete and will not be a real-time service.
In the latest piece of guidance for businesses who need to sign up to MTD for VAT, HMRC stated that those who pay VAT by direct debit will need to do so at least seven working days before sending a VAT return.
HMRC will send a confirmation email within 72 hours of signing up.
This means that businesses that do this will be unable to sign up in the seven working days up to or the five working days after sending a VAT return.
The new legislation, which comes into effect on 1 April 2019, will require all VAT registered businesses with a taxable turnover above £85,000 to keep digital VAT records and use software compatible with Making Tax Digital to submit their VAT returns.
Research conducted last month found that out of 1,000 VAT registered businesses just 12 per cent of those were ready for the 1 April deadline.
In a bid to combat this, HMRC released guidance during February on the steps involved, including ensuring the business has compatible software and has secured a Government gateway user ID.
They have announced that there will be a soft penalty regime for the first 12 months, which means that where companies have made a genuine error in reporting they will not be fined.
Last month HMRC also confirmed that companies will be able to use a ‘cut and paste’ approach during the one-year soft landing before companies need to use digital links.
Businesses are not required to file their first digital VAT return under Making Tax Digital for VAT until 1 July at the earliest, but the digital reporting requirement becomes mandatory in April.
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 firstname.lastname@example.org
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