At the end of last month, HMRC closed all their VAT online accounts leaving all VAT-registered businesses with the decision to either switch to use MTD-compatible software or be at risk of facing penalties.
Does your business file monthly or quarterly accounts?
From 1st of November, 2022, VAT-registered businesses no longer had the option to use their VAT online account to file quartile and monthly VAT returns. This may be something of a shock for those who are non-MTD- compliant businesses under the VAT threshold and quick action was needed to ensure they were ready to abide by the MTD regulations. The only exception to this is digitally excluded businesses, who are still able to use HMRC’s online VAT accounts.
Due to the closure of these accounts, businesses who currently file on a monthly or quarterly basis must look for or continue using MTD-compatible software to keep their VAT records. Voluntary VAT-registered businesses who just joined MTD VAT from April 2022 only had a short few months to comply with MTD.
Although the HMRC’s online portal is no longer available, businesses that file annual returns can still use this until 15 May 2023.
For those businesses that haven’t already, HMRC is encouraging you to choose a MTD-compatible software, make sure this is enabled to work with MTD , and then sign up for MTD and start filing returns after 1 November. HMRC will also issue a reminder email to VAT registered businesses on Wednesday 23rd November, to remind them that they can no longer use their existing VAT online account to file their VAT returns and that they must now use Making Tax Digital (MTD) compatible software.
MTD for Income Tax Self Assessment
HMRC have recently changed their guidance on MTD for Income Tax Self Assessment, and it is working making note of the key requirements which need to be in place by 6 April 2024:
- You need to submit your Self Assessment tax return for 2022 and 2023 by January 2024
- HMRC will review your return and check to determine if your qualifying income is more than £10,000
- If you are above this threshold, they will write to you and confirm that you must meet the new MTD deadline of 6 April 2024
- You or your agent must find software that’s compatible with MTD for Income Tax and authorise it
Useful links to HMRC’s MTD for ITSA guidance on GOV.UK can be found below.
- HMRC’s MTD for Business stakeholder communications pack is here.
- HMRC’s policy paper about customer costs and benefits for the next phases of MTD is here.
- HMRC’s tax information and impact note is here.
- To check if you are eligible for MTD for ITSA – see HMRC’s guidance here.
- To check when you must sign up to MTD for ITSA – see HMRC’s guidance here.
- To find out about keeping digital records, signing up and using software to send income and expenses updates – see HMRC’s guidance here.
- To apply for an exemption from MTD for ITSA – see HMRC’s guidance here.
- For information about out how to use MTD for ITSA instead of a Self Assessment tax return and how to sign up if you’re eligible – see here.
- Making Tax Digital for Income Tax as an agent: step by step. If you’re an agent, find out how to use Making Tax Digital for Income Tax instead of a Self Assessment tax return for your clients see here.
Optimise provides software that’s 100% HMRC-compliant so if you’re looking for a provider or want any help or advice, please contact us to get started.