The first batch of VAT-registered businesses have less than a month to go until they enter into the Government’s Making Tax Digital (MTD) regime.
All VAT-registered businesses turning over more than £85,000 will be mandated into MTD by 1 October 2019, with the majority of firms adopting the scheme by 1 June 2019. Firms with a VAT return quarter ending on 30 June 2019 will be the first to begin operating under the regime on 1 April 2019.
A month later, VAT-registered business with a return quarter ending on 30 April 2019 will be the second batch of businesses to go through MTD. Then on 1 June 2019, those with a VAT return quarter ending 31 May 2019 will adopt MTD.
A six-month deferral period for MTD applies to around 40,000 VAT-registered businesses with more complex accounts, such as not-for-profit organisations and local authorities among others.
While submitting VAT returns online every quarter and at year-end is nothing new, using HMRC-approved software is. Around 150 software providers or products have been given the green light by the Revenue so far.
Software provider Advanced claimed more needs to be done to get the UK’s 2.67 million VAT-registered businesses and their agents ready for MTD. It polled more than 1,000 professionals involved with VAT-registered businesses and found that 57% were prepared, while 35% did not know whether or not they will be ready for MTD.
Jon Wrennall, chief technology officer at Advanced, said: “The Government is right to implement initiatives that mean organisations need to become more digital, but our research suggests that not enough support is being given to help them prepare.”
MTD is intended to modernise the tax system, and make it easier for businesses and eventually individuals to record and report their tax accurately.