HM Revenue and Customs (HMRC) has recommended small businesses eligible for Making Tax Digital for VAT should allow up to five working days to set up direct debit instructions and begin making quarterly VAT payments.
Making Tax Digital (MTD) is HMRC’s flagship platform, designed to digitise the UK’s tax system. It’s hoped the system will improve the accuracy of self-assessment and VAT returns of small businesses, thus ensuring they only pay the tax owed.
HMRC rolled out MTD for all small businesses with an annual turnover above the £85,000 VAT threshold in April, with the first deadline for new quarterly VAT payments on 7th August less than a month away.
Following the roll-out of MTD for VAT in April, the Association of Tax Technicians (ATT) implored small businesses to carefully plan their enrolment into the online service. This was to prevent them from incurring unnecessary late filing penalties for their first quarterly VAT payment.
Previously, advice to small firms was to set up a direct debit instruction for quarterly VAT payments three working days prior to the deadline. However, HMRC has since recommended allowing five working days prior to the payment deadline as good practice.
Any VAT-registered businesses that report quarterly under MTD and have a quarter end of June 2019, will have their first payment due on or before 7th August 2019. This is the first quarterly payment due under MTD.
It’s important to note that once small businesses reach the £85,000 VAT threshold and are registered for MTD for VAT, they cannot remove themselves from the service and must continue to file all tax returns via MTD-compatible software.
Just 13% of respondents said achieving MTD compliance took longer than expected.
If you’re struggling to keep up with your MTD for VAT reporting obligations, we can help you through this period of change.
We’ve invested significant time into developing support services that make managing your books easy, thanks to our MTD-compliant software and guidance from your local TaxAssist Accountant all the way.