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6th October 2022

VAT businesses urged to sign up for Making Tax Digital

VAT-registered businesses have less than a month to sign up to Making Tax Digital (MTD) to submit VAT returns and store digital records.

From November 1, businesses will not be able to use their existing Value Added Tax (VAT) online account to file their returns unless an exemption from MTD has been agreed with HMRC. New businesses will be automatically signed up for MTD when registering for VAT.

Making Tax Digital is a government scheme which has been designed to transform tax administration, making it easier for businesses and individuals to get their tax right.

MTD sets out to digitalise UK tax by allowing firms to keep and maintain records and communicate with HMRC through its API platform. Similarly, MTD for VAT requires VAT-registered businesses to keep records digitally and file their VAT returns through compatible software.

So far, more than 1.8 million businesses are already using the service and around 19 million returns have been successfully submitted.

Businesses who do not file their VAT returns through MTD compatible software from November 1 may be liable to costly penalties.

Chamber partner Centurion VAT Specialists have been supporting businesses with the transition to Making Tax Digital.

Liz Maher, Director at Centurion VAT Specialists, said: “Compliance with the requirements of Making VAT Digital (MVD) is not just a focus on ensuring you send your VAT return information across to HMRC through a digital link. Many businesses have already addressed that and have an appropriate digital interface in place.

“The wider impact of MVD is having digital links within your VAT processes as you build up the VAT return data. For SMEs this may be achieved through the range of accounting packages available, but for larger organisations – whether manufacturers, public bodies such as councils, universities or the like – their financial data may come from a range of systems.

“It’s been important for these taxpayers to be able to walk through how they gather their VAT data from these range of sources – payroll or EPOS systems for retailers, for example – to ensure any VAT related data moves via digital link into the VAT account for consolidation prior to submission for HMRC. It’s compliance with these internal digital link requirements that should not be forgotten.”

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