HMRC has reminded businesses of the upcoming VAT portal closure at the end of October.
Key takeaways:
- The existing HMRC VAT portal will no longer be available from Tuesday 1st November 2022.
- If a business doesn’t use Making Tax Digital (MTD) compatible software when submitting its VAT returns, the business will be subject to a penalty of up to £400.
- If you’re a new business that hasn’t signed up for VAT yet, you will automatically be signed up for MTD when your VAT registration is completed.
- Over 19 million tax returns have been submitted using MTD-compatible software.
- We can help you sign up for the MTD scheme.
In a move to further the government’s Making Tax Digital plans, the existing VAT portal will no longer be available to use from Tuesday 1st November 2022 after it became mandatory for all VAT-registered businesses to use MTD from April this year.
What is Making Tax Digital (MTD)?
The Making Tax Digital (MTD) programme was introduced as part of the government’s plans to make tax administration and financial affairs more accessible for individuals and businesses. The initiative was first announced in 2015 and began implementation in 2019.
Since its inception, HMRC has worked closely with accounting software providers such as Quickbooks and Xero, to ensure the move to digital taxation runs as smoothly as possible. If you are yet to obtain compatible software, or you’re unsure if your existing provider is appropriate, get in touch with one of our tax specialists.
At present, more than 1.8 million businesses in the UK are benefitting from MTD to file their returns and store their records, with over 19 million tax returns submitted using MTD-compatible software to date (gov.uk – 2022).
What’s changing?
From 1st November 2022, all Value Added Tax (VAT) registered businesses will no longer be able to use their account on the existing portal to submit their returns and will need to create a new MTD account.
By law, all VAT-registered businesses must sign up to MTD and ensure they are using compatible software to retain VAT records and file their returns.
From the 1st of November onwards, if businesses do not file their returns using MTD-compatible software, they will be subject to a default surcharge or penalty of up to £400 for every return you file, and interest from January 2023.
What do you need to do?
For existing clients using the Aston Shaw cloud accounting service, you won’t need to do anything. All of the accounting software we use at Aston Shaw is compatible with the new MTD programme and any administration and returns will be completed in line with the new laws and procedures.
If you do not currently use our cloud accounting service and are not already signed up for MTD, find out how you can sign up.
If you require any help completing this, get in touch with one of our specialists.
For those who don’t already have MTD-compatible software, it’s time to make the switch. There are plenty of options available, including free and low-cost.
Find out if your existing software is compatible.
New businesses that are yet to register for VAT will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS). If you’re unsure how to do this, our VAT specialists are always on hand to help.
If you find yourself apprehensive about the HMRC portal closure move to digital taxation, read our article on why you should embrace Making Tax Digital. Alternatively, if you would like to discuss the MTD programme with one of our experts, or need help getting set up, get in touch.
