5 Making Tax Digital Myths We Busted
Date Published: April 4, 2019
Category: HMRC News, MTD for VAT, Making Tax Digital
With MTD going live on April 1st, media coverage has increased. This has been highlighted through several pieces of misinformation or myths, which we feel may not be helping your move to Making Tax Digital.
We wanted to “bust” some of the myths you might have heard on the news.
5 Making Tax Digital Myths
1. 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 HMRC can verify their information and migrate their record to the MTD system. They will not be undertaking a wholesale migration. From today, the processes of signing up, will not change and can be found here:
2. Are customers submitting the VAT return through existing XML software already MTD compliant?
No. HMRC are 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. You will still need to sign up to the MTD service and re-authorise your MTD enabled the software.
3. Does the customer have to submit their first MTD return immediately after 1st April?
No. The 1st of 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 you are on.
4. 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.
5. Can Agents sign clients up to MTD in bulk?
No. Agents must follow all steps outlined in the step-by-step agent guide to set a new Agent Services account and then if they choose to, sign their clients up to MTD. Where the agent undertakes the client’s sign up step themselves, it is important to note; this has to be done one client at a time. Alternatively, the client can sign themselves up to MTD.