With HMRC taking a constructive approach to enforcement the outlook is positive.

All VAT-registered small businesses with a taxable turnover of up to £85,000 will have to comply with the latest MTD legislation from April 2022. HMRC has urged these businesses to sign up for MTD for VAT before it becomes mandatory.

HMRC has also announced significant changes to the system for late VAT payments, which were initially due to come into force from April of this year. The new points-based system for late payments was intended to be tougher on repeat offenders but fairer on those who occasionally missed deadlines. This new system has now been delayed until January 2023.

It remains important for this last round of eligible VAT-registered businesses to prepare for MTD legislation and ensure the right processes and protocols are in place.

Some businesses are taking a forward-thinking approach and using the Government’s digitisation drive as an opportunity for further investment in cloud-based technology. However, there are concerns that smaller businesses may struggle to see the initial benefits, at least in the short term.

Key dates:

April 1 2022: MTD for all VAT-registered businesses becomes mandatory.
January 2023: new implementation date for new points-based late VAT payment penalty system.
April 2024: introduction of second stage of MTD for Income Tax Self-Assessment (ITSA).

Skillman Accountancy Limited uses QuickBooks' HMRC-recognised MTD software, which is designed for small businesses and is a Quickbooks MTD ProAdvisor.

https://www.aatcomment.org.uk/audience/members/transition-to-making-tax-digital-is-proceeding-smoothly-so-far/