In this blogpost you’ll find some frequently asked questions and answers about Making Tax Digital (MTD) for the UK.
Will customers over the VAT threshold be automatically signed up to MTD from 1st April?
No. MTD requires customers to sign up to the service, so that we can verify their information and migrate their record to the MTD system. We will not be undertaking a wholesale migration from today, the processes your users have been following, up until now, will not change.
Important: businesses should not sign up to MTD until they have filed their last return through the old xml route. This is because sign up migrates their record to our new MTD system and closes off the xml channel. If the business has been filing manually then they can sign up now.
Are customers submitting the VAT return through existing XML software already MTD compliant?
No. We’re aware that some customers, who already use software to submit their VAT return via the xml route, are under the impression this makes them MTD compliant. We need your help in reaching out to these customers, as they are unlikely to access HMRC’s communication channels regularly. We would appreciate you making clear in your software and guidance that they will still need to sign up to the MTD service and re-authorise their MTD enabled software.
Does the customer have to submit their first MTD return immediately after 1st April?
No. The 1st April is the date that customers are mandated to start keeping their records digitally. The date for filing the first MTD return, is the first full period that falls after the 1st April. This means that for monthly customers the earliest return would be 7th June and for quarterly customers the 7th August (assuming they haven’t already joined the pilot). The actual date will depend on what stagger the business is on.
Will customers receive penalties for not filing MTD returns or keeping digital records?
Not yet. The government has confirmed a light touch approach to penalties in the first year of implementation for MTD VAT. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. However, customers must continue to pay their VAT obligations on time, as late payment penalties will still apply.