From 1 November 2022, VAT-registered businesses will have no choice but to use Making Tax Digital (MTD) compatible software to file their VAT returns, unless they have a digital exclusion exemption.
Businesses with a taxable turnover above the VAT registration limit of £85,000 have had to use MTD VAT rules since 2019 and it became a requirement for all VAT businesses from 1 April this year.
HM Revenue & Customs (HMRC) will remove the option to file a VAT return from 1 November without using MTD compatible software, so it is advisable to set up this process sooner rather than later.
Despite promises to not issue penalties for those who use the wrong filing method, businesses could be handed a default surcharge instead and from January 2023, late payment penalties as well.
It has been reported that around 10 per cent of businesses above the VAT threshold and 55 per cent of those below it have not yet signed up to MTD VAT, which they need to do as soon as possible.
A portion of businesses have not signed up for MTD but are already filing their VAT returns using MTD software.
They must complete the sign-up process now and so you should check if this applies to your business as soon as you can.
For businesses that file VAT returns annually, the online return will be accessible until 15 May 2023.
Additionally, for those with a digital exclusion exemption, the online VAT return will remain open for those who can access it with assistance or through another body.
Businesses that benefit from this exemption should be aware of this, but if you are unsure it is best that you check before the November deadline.
For more advice and information, contact us today.