HMRC reached a significant milestone in the rollout of MTD with the first quarterly filing deadline for VAT – from 7th August, 370,000 (76%) VAT registered businesses above the threshold in stagger 1 had signed up.
According to HMRC, this is in line with its expectations, particularly given the public commitment that HMRC had made up front to taking a light touch approach to digital record keeping and filing penalties during the first year.
The focus during this period has been to support businesses moving to Making Tax Digital (MTD) to get it right and not to unnecessarily penalise businesses who are doing their best to make the transition.
HMRC is now writing to the businesses who did not sign up to encourage them to join as soon as possible and expect numbers to increase significantly in the coming weeks as a result. This was approached with monthly filers, whose first return through MTD was due by 7th June and 89% (40,000) of that group have now joined the service.
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Email JaimeNon-mandated customers are joining on a voluntary basis and sign-ups from businesses in stagger 2 (179,000) and stagger 3 (124,000) are accelerating in advance of their first submission deadlines on 7th September and 7th October respectively.
Those who have now switched to digital record keeping and signed up and submitted their first return have taken the biggest step in the MTD for VAT journey. Once businesses are set up and get used to the new way of doing things, they will be better placed to take full advantage of the benefits that the move to digital brings.
HMRC is pleased with progress but acknowledges that a small proportion of customers experienced issues when trying to meet their obligations. It apologises for the frustration and worry this may have caused.
Over the coming return deadlines HMRC will continue to monitor progress in the rollout of the VAT service and take stock of the lessons learned when considering the future direction of MTD.
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