Making Tax Digital rules became law for VAT periods starting on or after 1 April 2019 and businesses with an annual turnaround above £85,000 must sign up to MTD before 7 August VAT filing date in order to comply. Businesses that are registered for VAT but are below the VAT threshold are not currently required to use the MTD service, but can choose to do so.

Many of the 1.2 million businesses affected by the MTD rules, which became law for VAT periods starting on or after 1 April, will be required to submit their first quarterly VAT return to HMRC using software by the 7 August. If paying by direct debit, these businesses must register by Friday 27 July.

Theresa Middleton, Director of Making Tax Digital at HMRC, said:

“Now is the time for businesses with an August quarterly filing deadline to sign up and join the hundreds of thousands already experiencing the benefits of MTD.

During this first year we won’t be issuing filing or record keeping penalties to businesses doing their best to comply.”

HMRC revealed that:

  • At present, approximately 10,000 businesses are registering for MTD daily.
  • Over 600,000 businesses have signed up in total, with around 400,000 submissions already successfully made using software.
  • The financial sector has been one of the slowest to sign up, with nearly 75% yet to sign up.
  • Businesses in the agriculture sector (such as farmers) have been one of the fastest groups to sign up to MTD, with 50% already registered.

If paying by direct debit, businesses should register at least 7 working days before a return is due. If not paying by direct debit, businesses can register at least 72 hours (3 days) before their return is due. Make sure you have MTD-compatible software and that your last pre-MTD direct debit has come out of your bank account before signing up.

HMRC announced that during the first year, they will not issue penalties for filing or record keeping where businesses are doing their best to comply. However, sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.

There is a full step-by-step guide for businesses about registering for MTD on GOV.UK.

We understand that MTD may bring significant changes to the way you keep your records and file your VAT returns, so we have spent the recent months making sure that our clients are prepared and fully compliant. We can help to guide your business too and support your company in choosing the best compatible software best for your business.