HMRC have announced that businesses who have missed the deadline for signing up for Making Tax Digital won’t receive a penalty if their VAT return isn’t filed through Making Tax Digital Software.
The government set the deadline for businesses to begin submitting their VAT returns digitally through approved software but have now backtracked on any penalties for missing the deadline.
There are certain requirements that a business must have followed to ensure they don’t receive a penalty, which we will outline below.
Making Tax Digital: The Idea
Making Tax Digital requires a business to process all of their financial information online, on a regular basis, and then submit this to HMRC digitally through MTD approved software.
The aim is to ensure that Tax recording is more accurate, submitting to HMRC is faster and the whole process making recording and filing information easier.
This is an effort to simplify the way that businesses submit their financial information to HMRC.
It seems however that many are complaining about the trial period being too short, and that the system isn’t ready yet.
Who Does The ‘No Penalty’ Actually Apply To?
The news about penalties was sent to tax agents by HMRC’s Making Tax Digital for Business Customer Readiness & External Stakeholder Team in early August.
The email said that businesses who have failed to sign up in time won’t be penalised. However, they must file their VAT return the old way instead.
If businesses miss the VAT return completely then they will be penalised.
Businesses who failed to sign up in time for Making Tax Digital must do so for their next VAT return, and should not be alarmed if they receive a letter telling them that they missed the deadline.
What Is Happening Behind The Scenes At HMRC?
There have been concerns across the UK about delays with businesses signing up for Making Tax Digital.
Even those that have signed up don’t seem to be receiving the confirmation as quickly as expected.
Reports says that there is a delay on HMRC’s side in sending out the email confirmation when a businesses signs up for Making Tax Digital. The email should be sent within 72 hours, however it is taking longer.
This means that HMRC can’t confirm whether a business signed up for Making Tax Digital in time and have therefore given all businesses a pass due to their own delays.
If a business misses the VAT return, even through the old way of submitting, they will still be penalised as normal.
If you, or a business you know, isn’t signed up for Making Tax Digital then point them our way.
We’d love to help businesses get set up on Making Tax Digital software and teach you how to use the HMRC approved software that we and our clients all enjoy.
Fill out the form below for more information.
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