HM Revenue & Customs (HMRC) has promised a light touch approach to compliance with its Making Tax Digital (MTD) programme for the first year.
The department gave the indication in urging businesses to ensure they have made arrangement s to use the relevant software when the new system comes into full use next month.
It said that it recognises many businesses will need time to become familiar with the requirement of MTD, and that none will be forced to go digital for their VAT returns if they are unable to do so. Also, any firms already exempt from online filing will remain so, and there are provisions for those with problems in adapting due to age, disability, location or religion.
But it said this does not mean a blanket ‘no penalties’ promise, conveying that businesses cannot just ignore the change.
Support for signing
Meanwhile, it has urged businesses to sign up for MTD immediately, providing relevant guidance for support.
Under MTD. From 1 April most businesses about the VAT threshold will need to keep their records digitally and submit their VAT return using compatible software. HMRC has written to every business mandated with information on what they need to do.
It also pointed out there are more than 160 software products that businesses can use to comply, including some that are free.
Mel Stride, financial secretary to the Treasury, said the change will give businesses more control over their finances and make it easier for them to get their tax right first time.
There have been concerns that a large number of businesses will not be ready for the system when it comes into force. It had already been delayed by a year when last November the House of Lords Economic Affairs Committee published a report on the issue saying companies needed more time to prepare.