HM Revenue & Customs (HMRC) has reassured the 120,000 businesses that failed to meet the 7 August deadline for Making Tax Digital (MTD) for VAT that the tax authority will not be issuing fines to them for missing the date.
Under MTD, all businesses with a turnover of £85,000 or more must keep computer-based records and file their VAT return using approved and HMRC-compliant software.
The latest figures suggest that around one in four firms failed to meet the deadline, meaning that the taxman could have issued tens of millions of pounds in fines, which could be between £100 and £400, depending on the turnover of the business.
However, HMRC has said that it will adopt a ‘light touch’ approach to penalties in the first instance and, according to officials, the organisation is also giving leeway to businesses because of the possibility of a no-deal Brexit.
While the taxman is showing leniency now though, it has been made clear that late filings will be punishable with fines after the ‘soft landing’ period ends during April 2020, even though recent research has found that the majority of business owners say they feel unprepared for MTD.
Moreover, the research, conducted this month by YouGov, found that only 12 per cent of business owners said they were ‘very prepared’ for MTD, and 28 per cent of small firms said they were worried about the costs of ensuring compliance. More worryingly, 12 per cent of those polled said they had not even heard of MTD, despite the first two submission deadlines having now passed.
For help and advice with any aspect of Making Tax Digital, contact a member of our expert team today.