As of today, UK based businesses that have a taxable turnover above the VAT threshold of £85,000 will be required to switch to the new digital tax service to report earnings and calculate VAT owed.
HM Revenue and Customs (HMRC) had previously claimed that 80 per cent of businesses required to join MTD were aware of the changes and had already started preparations for the Government’s new initiative to digitalise the tax returns process.
However, only four per cent (55,250) of UK businesses have registered for making tax digital (MTD), leaving more than one million to sign up.
Figures revealed that more than 3,000 businesses are registering to MTD every day; nevertheless this would mean that only 402,000 will have signed up by August 2019.
Even though MTD for VAT came into force today, most businesses won’t need to file a quarterly return until 1 July 2019 at the earliest.
HMRC has stated that they are starting with a one-year soft landing and there will be some leniencies on how you file your first returns.
Initially, businesses won’t need to have a digital link between how transactions are recorded and how you submit your VAT return. But they will need to use bridge software to submit their figures while continuing with their usual VAT system.
For further advice on making tax digital, get in touch today.