The first deadline for businesses to file their VAT returns using the new Making Tax Digital (MTD) system was 7th August. And 900,000 of the one million businesses who registered in time, submitted their return by this date. There is good news from HMRC for those who missed it. No fines will be issued – a first in tax office administration history.
Who is affected by this part of the Making Tax Digital policy?
As you know, HMRC intend to take as much tax administration online as possible. This most recent step affects businesses which earn over the £85,000 VAT threshold. They now need to submit their VAT returns online.
How many businesses didn’t file on time?
A quarter of businesses did not submit their VAT return through the MTD by the 7th August deadline. That’s around 120,000 businesses in total. This figure includes those that are not yet registered to use the system.
How much would the fines have earned HMRC?
The penalty structure is based around the turnover of the business and ranges from £100 to £400 for late VAT filing. Multiply that by the 120,000 businesses and you can see that HMRC have let go of a substantial amount.
Why have HMRC not enforced the MTD penalty system?
HMRC have said that they are not fining businesses because they are busy preparing for the possibility of leaving the EU without a deal.
As reported by SmallBusiness.co.uk, Jim Harra, HMRC’s Deputy CEO said: “We are very pleased that nearly a million businesses have signed up and thank them for joining. Our ambition is to help businesses moving to MTD to get it right, not to penalise them. HMRC’s decision not to enforce penalties will help businesses transition to MTD without fear of getting it wrong.”
Businesses will get a reminder from HMRC in the post, if they missed the August deadline. It they are not yet registered for MTD, they will get an email. As it stands, HMRC are telling those who aren’t registered to file their VAT returns using the old system for now
