Recent data from HM Revenue & Customs shows that fewer than 200,000 businesses are yet to sign up for the new Making Tax Digital (MTD) regime leading The Yorkshire Accountants, Thomas Coombs, to offer help to businesses.
The new digital tax regime came into effect on 1 April and requires around 1.2 million VAT registered businesses earning over £85,000 to keep their records digitally and submit online VAT returns.
However, HMRC has said that the initial sign up for the MTD has been slow, but was increasing at a rate of around 4,000 businesses per day.
Peter Sawrij, a Director at Thomas Coombs, said: “It is important that businesses understand their responsibilities under MTD and are properly prepared by registering to report their information later this year when the first quarterly MTD VAT period starts.
“Businesses that haven’t signed up yet shouldn’t panic, as HMRC stated that they recognise businesses will require time to become familiarised with the new requirement, which is why they are offering an initial soft-landing period of up to 12 months for businesses to comply with the reporting requirements effectively.”
In order to sign up to MTD businesses must complete the online HMRC form, which can be accessed here. Under the new regime, businesses must use compatible software or specialist bridging programmes to record and report their data.
“Whilst HMRC has said it will offer a soft-landing period for reporting VAT affairs if a business is not yet recording their information using the software required then it is essential that they act now to get this in place,” Peter added.
He said that MTD was likely to be extended to other forms of taxation from 2020 at the earliest and believes that many more businesses could be affected in future.
“This is just the initial phase of MTD and many more businesses will need to comply in future which is why it is important that they seek out specialist advice so that they are prepared and can make full use of the benefits that online accounting can offer,” Peter added.