More than 3,800 small businesses have missed their first deadline for quarterly digital VAT returns, as part of the UK’s new Making Tax Digital (MTD) system.
Those small firms required to report their VAT figures digitally for April, May and June 2019 should have done so prior to the 7th August deadline.
Although HM Revenue and Customs (HMRC) has said it will not enforce late filing penalties for MTD for VAT returns this year, providing they file VAT returns on time using the old HMRC portal, small business owners are being urged to keep pace with the digitisation of the UK’s tax reporting system.
All small businesses with annual incomes above the £85,000 VAT threshold will be required to sign up to Making Tax Digital for VAT and use accounting software that’s approved by HMRC to comply with the new digital VAT returns system.
One of the biggest issues small firms have faced so far in adopting MTD for VAT is the use of MTD-compliant software. The combination of training existing staff and having to hire new staff with the capability to use the software has provided additional roadblocks to time-poor businesses.
The majority of small businesses also admit to making errors when filing their VAT returns, which can result in underpayments in VAT that affect cash flow further down the line.
In addition, a recent YouGov poll found that just only 12% of small firms were “very prepared” for MTD for VAT. Meanwhile 28% were concerned about the additional costs incurred in maintaining a digital tax reporting schedule.
Small businesses needn’t worry about having to train staff or take on new employees to maintain digital VAT records. At TaxAssist Accountants, we offer a comprehensive Making Tax Digital service, utilising MTD-compliant software such as QuickBooks to make managing your accounts straightforward, wherever you are.
If you would like us to work with you through the changes to the VAT reporting landscape, avoiding unnecessary late filing and non-compliance penalties in the process, we’re here to help.