Penalty warning for MTD

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The Association of Taxation Technicians (ATT) has advised businesses who are already enrolled for Making Tax Digital (MTD) to submit their latest VAT returns as soon as possible. A failure to do so could see those businesses issued with penalties.

MTD was introduced on 1st April 2019, but businesses did not have to sign up at that point. Many professionals have encouraged firms to sign up at a later date. Ideally, they should only do so once their last ‘pre-MTD’ return has been filed.

Jon Stride of ATT said: “Once a business has signed up to MTD it must submit all VAT returns – including those for periods starting before April 1 2019 using MTD-compliant software. This could cause problems if the business signs up to MTD before submitting its final return under the pre-MTD rules.”

A business which submits its VAT each quarter would have to send its VAT for the quarter that ended on 31st March 2019 by 7th May 2019. If they have signed up for MTD before submitting this return, it would have to be submitted using MTD-compliant software or it will not be accepted by the HMRC system. If the business is not ready for this change, then it might encounter problems and be unable to meet the submission deadline. Unfortunately for companies, there is no allowance for this, while HMRC has said that in the first 12 months it will apply a ‘light touch’, this only applies to record keeping and in circumstances where a business can prove it genuinely attempted to comply.