Latest figures from Her Majesty’s Revenue & Customs (HMRC) have revealed that 120,000 businesses with a turnover of over £85,000 have failed to meet the first Making Tax Digital quarterly filing deadline of 7 August 2019.
Equivalent to one in four firms, the net result could have seen the taxman issue fines totalling tens of millions of pounds.
What is Making Tax Digital (MTD) for VAT?
Making Tax Digital (MTD) is a government initiative aimed at making tax administration easier for individuals and businesses.
It is part of the UK government’s initiative that sets out a vision for the ‘end of the tax return’ and a ‘transformed tax system’ by 2020.
Under MTD, all businesses with a turnover of £85,000 or more must keep computer-based records and file their VAT return using HMRC-compliant software.
To date, over 1.1m businesses have signed up for Making Tax Digital, with over 1.2m VAT returns successfully submitted through the service.
What will happen to businesses who missed the August deadline for Making Tax Digital?
Her Majesty’s Revenue & Customs (HMRC) reserved the right to issues fines of between £100 and £400 (depending on the gross turnover of the business) to those companies who failed to file their return by the 7th August 2019.
Fortunately however, for those 120,000 businesses who missed the 7 August 2019 deadline, HMRC has issued reassurances that the tax authority will not be issuing fines on this occasion, where businesses are shown to be doing their best to comply.
Preferring instead to take a ‘light touch’ during the first 12 months, HMRC have issued ‘TV licence’-style reminders urging these businesses to register before next month.
A spokesperson for HMRC said: ‘We want businesses to join MTD without fear of getting it wrong – HMRC are not penalising those transitioning.
‘Our letters are the latest in a series of communications to encourage those remaining businesses to join the 1.1m who already have signed up and ensure they know how to access support to do so if they need it.’
It is thought the move not to issue fines comes amid a series of leniency measures to help businesses ahead of a possible no-deal Brexit.
What happens next with Making Tax Digital at PWH Accounting?
The taxman may well be showing leniency now but it has been made clear that late filings will be punishable with fines after April 2020.
This is despite recent research by YouGov which shows that only 12% of business owners currently feel ‘very prepared’ for Making Tax Digital.
The majority of business owners say they feel unprepared for MTD, with 28% of small businesses saying they were worried about the costs of ensuring compliance.
A worrying 12% said they had not even heard of MTD, despite the 7 August deadline, which has now expired.
Where can I get help with Making Tax Digital?
If you would like to know more about Making Tax Digital and how it might affect your business, then call PWH Accountancy Ltd on 01455243773, where one of our friendly and knowledgeable team will be more than happy to help answer your questions.
You can contact PWH Accountancy Ltd for information and advice on Making Tax Digital and any other accountancy related query.