HMRC is warning VAT-registered taxpayers that they have only one month left to register for Making Tax Digital (MTD) for VAT. It seems that there are some 100,000 businesses that have yet to sign up and file under the new system.

Unless you have actually claimed exemption, businesses which file monthly and quarterly VAT returns and that are not already signed up to Making Tax Digital for VAT, or Making VAT Digital (MVD) or have not started using compatible software, must do so now.

Failure to comply with the requirements of MVD will result in VAT penalties and from 1 January 2023, a new Points-based VAT penalty system applies.

To get started with MTD for VAT:

  1. Choose MVD-compatible software: a list of software, including free and low-cost options, such as filing from Excel-type spreadsheets, can be found on GOV.UK
  2. Check the permissions in the software. Once a business has allowed it to work with MVD, it can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’.
  3. Keep digital records for current and future VAT returns: a business can find out what records need to be kept on GOV.UK
  4. Sign up for MTD and file future VAT returns using MTD-compatible software: to find out how to do this, go to GOV.UK and search ‘record VAT’

If a business is already exempt from filing VAT returns online or if their business is subject to an insolvency procedure, they will automatically be exempt.

A business can check if they can apply for an exemption from MTD on GOV‌‌‌.UK if it is not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.

If a business is new and is not yet registered for VAT, it will automatically be signed up for MVD while registering for VAT with HMRC’s new VAT Registration Service (VRS).

Extra support is available at HMRC

Useful guides on this topic

Making Tax Digital: VAT (subscriber guide)
What is Making Tax Digital for VAT? What is VAT 'functional compatible' software? What do you need to do to report your VAT? Are there penalties for making mistakes?  

Making Tax Digital for VAT: who is digitally excluded?
Who can claim exemption from Making Tax Digital for VAT?  What are the issues?

VAT Penalties
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

External links

HMRC Less than one month to go


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