By law, all VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use compatible software to keep their VAT records and file their returns.
According to HMRC, more than 1.8 million businesses are already using the MTD for VAT service. Over 19 million returns have been successfully submitted through MTD-compatible software so far, the tax authority adds.
From November, businesses who file their VAT returns on a quarterly and monthly basis will no longer be able to submit them using their existing VAT online account, unless HMRC has agreed they are exempt from MTD.
If businesses do not file their VAT returns through MTD-compatible software, they may have to pay a penalty. Even if a business currently keeps digital records, they must check their software is MTD compatible and sign up for MTD before filing their next return.
Richard Fuller, Economic Secretary to the Treasury, said:
‘MTD can help businesses get their tax right first time, which cuts the administration burden and frees up time for them to get on with what matters most to them – growing their business.’
Link to >> HMRC press release