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Penalties will not be applied to businesses that have problems with filing VAT returns under Making Tax Digital (MTD) in the first year of the new system.
“HMRC will take a light-touch approach to penalties, by not issuing filing or record-keeping penalties where businesses are doing their best to comply with MTD,” guidance published by HMRC on Monday reads.
New digital tax rules for VAT became law on 1 April and apply to businesses with an annual turnover above £85,000.
It requires digital records of business transactions to be kept and VAT returns to be submitted to HMRC through a digital link in MTD-compatible software programmes.
The new system only applies to accounting periods that begin on or after 1 April 2019. This means business transactions that take place from this week onwards will need to be recorded on a digital format for future VAT submissions.
However, VAT submissions for accounting periods that began before 1 April 2019 can still be made manually through HMRC’s existing online VAT portal.
The due date for submitting VAT returns is usually one month and seven days after the end of the VAT period, so most farm businesses in NI that file VAT quarterly will not be required to use MTD-compatible software for submitting VAT returns until August.
“Now is the time for those businesses affected by MTD who haven’t done so already to begin preparing to switch over,” said Theresa Middleton from HMRC on Monday.
The three main options for MTD are to use accounting software to file records of business transactions and submit VAT returns; use a standard Excel spreadsheet to file records and then submit VAT returns through bridging software; or hire an accountant or bookkeeper to submit VAT returns on your behalf.
SHARING OPTIONS: