Businesses with an annual turnover above £85,000 are being urged by HMRC to sign up to Making Tax Digital (MTD) before the August 7 VAT filing date – as new figures reveal slow progress in some sectors.
Many of the 1.2 million businesses affected by the MTD rules, which became law for VAT periods starting on or after April 1st, will be required to submit their first quarterly return to HMRC using software by that date.
The taxman has revealed that at the moment around 10,000 businesses are registering for MTD every day.
More than 600,000 businesses have now signed up in total, with some 400,000 submissions already successfully made using software
However, it appears some industries are being more pro-active than others. Businesses in the agriculture sector have been one of the fastest groups to sign up to MTD, with 50 per cent already registered.
In stark contrast, the financial sector has been one of the slowest, with nearly 75 per cent yet to sign up. It is a statistic that has shocked industry watchers.
It also appears the taxman is taking a softly-softly approach when it comes to the switch over.
Theresa Middleton, Director of Making Tax Digital at HMRC, says: “During this first year we won’t be issuing filing or record keeping penalties to businesses doing their best to comply.”
However, HMRC stresses sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.
Regardless of where they are in their digital compliance and software upgrades, businesses should still aim to pay their VAT on time.
HMRC expects MTD to reduce tax lost as a result of errors, thanks to the improved accuracy that digital records provide and the fact that information is sent directly from software to HMRC.
The latest tax gap figures showed avoidable mistakes cost taxpayers more than £9.9 billion last year – £3 billion attributable to VAT alone.
Making Tax Digital was first announced in 2015 as a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
There are many different software options in relation to MTD. Our dedicated Cloud Accounting team has the expertise to identify the most suitable solution for your business, as well as provide training and on-going support.
To discuss any aspect of MTD and how it affects you and your business please contact me on 01772 430000.