As of the 1st April 2019, the making tax digital (MTD) regulations have been applicable for VAT periods beginning on or after this date. This means that most VAT registered businesses were required to comply with these changes.
As the MTD regulations were a new introduction for businesses, HMRC has not been imposing any penalties for those who did not comply with the rules. Instead, they opted for nudging businesses with letters and advertising campaigns. However, this is now changed, and HMRC will be taking a tougher approach.
When To Expect From The MTD Regulations Moving Forward
Now that businesses have had time to familiarise themselves with the MTD regulations, HMRC is starting to become stricter on traders who have not signed up to MTD. To date, around 800 businesses have been told that although they can file their current VAT return using the old HMRC portal (online form), from the 8th July 2021, the old portal will close, and they must use the new MTD software. If this approach proves to be successful, it will be rolled out to others in a similar position.
For businesses with an annual turnover under the VAT registration threshold of £85,000, there will be no need to start using MTD until their first VAT period starting on or after 1st April 2022. Although these businesses will have more time, it is highly recommended to begin preparing for the move to MTD sooner rather than later.
The MTD regulations state that the VAT data must flow through the accounting system without the need for manual intervention; this can include steps such as re-typing or copying and pasting figures. Should your system still involve manual stages, they will need to be replaced with digital links as soon as possible as they need to be implemented from the first accounting period that starts on or after 1st April 2021.
Our team will happily advise you on the best options available to you, so feel free to get in touch.