Are you registered for Making Tax Digital yet?
Launched on 1 April 2019, most VAT registered businesses are now required to comply with the new Making Tax Digital for VAT regime.
However, many businesses may not be aware that they are required to register to use the new system and that this process can take up to seven working days to complete.
If you pay VAT by direct debit you will need to sign up seven working days before sending your first MTD VAT return and you cannot sign up within five working days after sending your last non-MTD VAT return.
Once businesses have registered, HM Revenue & Customs (HMRC) will send a confirmation email within 72 hours of signing up.
Companies will not have to file their first digital quarterly VAT return until 1 July at the earliest, although dates will differ depending on the business’s previous VAT quarter end. However, the digital reporting requirements of Making Tax Digital become mandatory from April.
There will be a ‘soft landing’ period during the first 12 months, in which HMRC has promised not to penalise companies if they make a genuine reporting error.
As the use of software is integral to the process of recording and reporting VAT, HMRC has also launched a new tool that allows businesses to filter certain criteria to find the software package that they require.
At present, the number of filters is extremely limited, but the Institute of Chartered Accountants in England and Wales’ Tax Faculty have learned that HMRC intends to expand the number of filters in future.
HMRC has also launched new guidance on the software required to report income tax under MTD, as it is expected that businesses will be required to report and record this information digitally from April 2020 at the earliest.
For more information, contact Baines Jewitt on 01642 632032