HM Revenue and Customs (HMRC) has distributed 120,000 TV licence-style warning letters to VAT-registered small businesses that missed the deadline for their first Making Tax Digital for VAT return in August.
The first deadline for quarterly MTD for VAT submissions was 7th August. Around 490,000 businesses should have completed their first quarterly digital VAT return then, but 120,000 are yet to register.
Consequently, the tax authority is issuing warning letters in the same approach as TV licence warning letters to those who are yet to transition to the new digital tax reporting requirements.
HMRC has moved to reassure the UK’s VAT-registered business community that it is not looking to punish those who are struggling to adjust to the MTD for VAT regime.
A spokesman for HMRC said: “We want businesses to join MTD without fear of getting it wrong – HMRC are not penalising those transitioning.
“Our letters are the latest in a series of communications to encourage those remaining businesses to join the 1.1 million who already have signed up and ensure they know how to access support to do so if they need it.”
Following the launch of MTD for VAT, HMRC confirmed it would not be implementing financial penalties for non-compliance during the first year of transition. In normal circumstances, those who missed VAT return deadlines are hit with £100 late filing penalties.
MTD for VAT is the first phase of HMRC’s new digital tax reporting regime, designed to improve the accuracy of the data that HMRC holds about your business.
In 2021, a further roll-out of Making Tax Digital is anticipated, which will affect small firms operating beneath the £85,000 per annum VAT threshold.
If you’re a VAT-registered business that’s yet to make the switch to MTD for VAT, we can work with you to fully understand the requirements of managing your business records digitally.
For a free initial consultation on your MTD for VAT obligations, please don’t hesitate to call your local TaxAssist Accountants branch today on 020 8883 5258 or drop us a line using our online enquiry form.