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Latest data from HMRC suggests that 100,000 businesses have already signed up to Making Tax Digital (MTD), with over 4,000 signing up every day.
From Monday, the government’s major Making Tax Digital program becomes law for over 1 million VAT registered businesses earning over £85,000.
The new rules, first announced in 2015, mean most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software for VAT periods starting on or after 1 April.
HMRC has been urging businesses to get ready and has already written to every business affected with information on what they need to do, it said in a statement on Monday.
"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," said Mel Stride, Financial Secretary to the Treasury.
Mr Stride judged that MTD will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.
Theresa Middleton, director of the Making Tax Digital for Business program, explained that businesses don’t necessarily need to sign-up from day one, but they do need to make sure they’re keeping their records digitally for their next VAT period, which starts on or after 1 April.
What do businesses need to do now?
If you have not prepared, do not panic, HMRC advised.
It clarified that 1 April is not a cliff edge for sign-ups – the first returns under the new system for the majority of businesses, which file VAT quarterly, won’t be due until August at the earliest.
"Accountants or other tax representatives will already be aware of MTD and will advise businesses how and when they need to make changes to be ready for the new service," HMRC said.
"Those already using software will simply need to ensure it’s MTD-compatible then sign up to the new service and authorise their software for MTD."
For those who are not using an accountant or don’t currently use software, HMRC said it is quick and easy to sign up and there is lots of information available to help businesses prepare, including about what software is available.
Steps to follow
The Making Tax Digital myth buster is here.