4th October 2022 Posted by - Alexander Accountancy
HM Revenue and Customs (HMRC) is reminding businesses that from Tuesday 1 November 2022, they will no longer be able to use their existing Value Added Tax (VAT) online account to submit VAT returns.
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.
MTD’s aim is to help businesses get their tax right first time by reducing errors, making it easier for them to manage their tax affairs by going digital, and consequently helping them to grow.
More than 1.8 million businesses are already benefitting from the service, and more than 19 million returns have been successfully submitted through MTD-compatible software so far.
In less than one month, 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 MP, Economic Secretary to the Treasury, said:
Making Tax Digital 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.
I encourage any VAT-registered businesses still to register for Making Tax Digital to get online and sign up.
If a business hasn’t already signed up to MTD or started using compatible software, they must follow these steps now:
- choose MTD-compatible software – a list of software, including free and low-cost options, can be found on GOV.UK
- check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’
- keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK
- sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.UK and search ‘record VAT’
If a business is already exempt from filing VAT returns online or if their business is subject to an insolvency procedure, they will automatically be exempt.
