Register for Making Tax Digital for VAT or risk penalties, HMRC warns
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.
It comes after HM Revenue & Customs (HMRC) wrote to 100,000 non-compliant businesses reminding them of their obligations.
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, such as Xero or QuickBooks.
However, the latest research suggests that one in 10 businesses have yet to register for the service.
HMRC said failure to comply with the rules may result in a penalty of up to £400 or the removal of the online VAT return altogether – leaving businesses with no other option than to register for MTD for VAT.
It means that affected traders will be able to file their March to May 2021 return via the online VAT return, but will be blocked from filing any subsequent returns in this way.
Commenting on the compliance letter, the Institute of Chartered Accountants in England and Wales (ICAEW) said businesses should not delay in registering for MTD.
“HMRC is taking a tougher approach to traders that should have signed up to Making Tax Digital for VAT including a trial of closing their access to online VAT returns,” the regulator said.
“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 to file that return using MTD software, by 07 October 2021.
“HMRC intends to monitor the response to this approach before considering whether to use it more widely.”
For support complying with Making Tax Digital for VAT, please get in touch with our expert team today.
