More than 68,000 businesses in London, with a turnover above £85,000, have signed up to Making Tax Digital (MTD).
HMRC is now urging the remaining businesses, that are required to sign up in the region, to do it before the VAT filing deadline next month.
Many of the 1.2m UK businesses affected by the MTD rules, which became law for VAT periods starting on or after 1 April, will be required to submit their first quarterly VAT return to HMRC using software by the 7 August 2019. If paying by Direct Debit, these businesses must register by Monday 29 July 2019.
MTD was first announced in 2015 and will make it easier for businesses to get their tax right, reducing tax lost due to avoidable mistakes.
HMRC’s reminder comes as it reveals:
- At the moment, around 10,000 businesses are registering for MTD every day.
- More than 600,000 businesses have signed up in total with some 400,000 submissions already successfully made using software.
- Businesses in the agriculture sector (such as farmers) have been one of the fastest groups to sign up to MTD with 50% already registered
- The financial sector has been one of the slowest to sign up with nearly 75% yet to sign up.
Theresa Middleton, Director of Making Tax Digital at HMRC, said, “Now is the time for businesses with an August quarterly filing deadline to sign up and join the hundreds of thousands already experiencing the benefits of MTD.
“During this first year we won’t be issuing filing or record keeping penalties to businesses doing their best to comply.”
The MTD rules became law for VAT periods starting on or after 1 April 2019 and require VAT-registered businesses with taxable turnover of more than £85,000 to keep their VAT records digitally and to submit their VAT return direct from their MTD-compatible software.
HMRC expects MTD to reduce tax lost due to errors, thanks to the improved accuracy that digital records provide and the fact that information is sent directly from software to HMRC.
The latest tax gap figures showed avoidable mistakes cost taxpayers more than £9.9bn last year, £3bn attributable to VAT alone.
Ed Molyneux, CEO and co-founder of FreeAgent, said, “The deadline for businesses to make their first VAT submissions under the new Making Tax Digital legislation is approaching fast, so it’s vital that anyone who has yet to get ready for it does so as soon as possible.
“Although HMRC has said that it will not issue fines during the first year to businesses that are doing their best to comply with MTD, it’s important to remember that this is not a stay of execution. You must actually be making a genuine effort to get your business ready for filing VAT submissions through software, otherwise those penalties will be a genuine danger that could be detrimental to your business. It simply isn’t an option to keep your head in the sand about digital tax any longer.
“We would therefore urge anyone who has not yet registered for MTD for VAT to do so before the end of July, and to make sure they have suitable HMRC-compatible software in place to submit their first digital returns in the coming months.”