100,000 businesses signed up for MTD, says HMRC
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
- Find out if your business is affected by the MTD changes and what you need to do if it is. Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.
- Talk to your accountant or agent – if you use one to manage your VAT affairs – about how they are making returns MTD-compliant.
- Speak to your software provider if you already use software to ensure it will be compatible.
- Those businesses that are either not represented by an accountant and/or do not already use software will need to select software to use and sign up to MTD, then authorise their new software for MTD. The GOV.UK webpages provide information on a wide variety of products, from free software for businesses with more straightforward tax affairs, to increasingly sophisticated paid solutions. There are also products that can be used in conjunction with a spreadsheet for those businesses that don’t want to change their underlying record keeping system.
The Making Tax Digital myth buster is here.