HM Revenue & Customs’s (HMRC) new Making Tax Digital (MTD) system has gone live.
It applies to over 1 million VAT-registered businesses earning more than £85,000 per year, and requires that most above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software for periods starting on or after 1 April.
HMRC said that almost 100,000 businesses have already signed up to the new service and more than 4,000 are doing so every day.
It has also re-emphasised its plans to initially take a light touch approach to penalties by not issuing filing or record keeping penalties where businesses are doing their best to comply with MTD.
A pilot has been running for six months in which thousands of businesses have contributed to the testing of the live service. Other businesses are now required to do so before their first quarterly VAT returns are due. They will also have to authorise their software for the service.
Delay and warning
The launch comes after a series of problems that led to a year-long delay, and a warning as recently as last November, from the House of Lords Economic Affairs Committee, that many businesses will not be ready for the new system.
It has required the developers of software for tax returns to ensure that their systems work smoothly and are authorised for MTD.
Financial Secretary to the Treasury Mel Stride said: “Delivering Making Tax Digital for VAT is the first step toward our ambition to create one of the most digitally advanced tax authorities in the world.
“The rules that come in from today will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.”
Image paulclarke.com
