The latest HMRC notification updated its guidance for businesses looking to sign up to Making Tax Digital for VAT, pointing out those that pay VAT by direct debit will need to do so at least a week – seven working days – before sending a VAT return.
This means that businesses that pay VAT by direct debit cannot sign up in the seven working days leading up to, or the five working days after sending a VAT return.
HMRC will send a confirmation email within 72 hours of signing up.
From April 2019, most VAT registered businesses with a taxable turnover above £85,000 must keep digital VAT records and use software compatible with Making Tax Digital to submit their VAT returns.
HMRC put out guidance in early February on the steps involved, which include ensuring the business has compatible software and a government gateway user ID.
There will be a soft penalty regime for the first 12 months, which means that where companies have made a genuine error in reporting they will not be fined. Last month HMRC also confirmed that companies will be able use a ‘cut and paste’ approach during the one-year soft landing before companies need to use digital links.
Companies will not have to file their first digital VAT return under Making Tax Digital for VAT until 1 July at the earliest, although the digital reporting requirement becomes mandatory in April.
Research conducted by KPMG with 1,000 VAT registered businesses at the start of last month found that just 12% were supportive and ready for the 1 April deadline, literally days after the proposed Brexit day on 29 March.