Farm businesses have been among the fastest to register ahead of a deadline for the HMRC’s Making Tax Digital (MTD) service, figures show.
The new online system applies to the 1.2m businesses with an annual turnover above £85,000 and which are therefore required to file quarterly VAT returns.
The rules apply to VAT periods from 1 April, which means businesses who file quarterly must submit returns using approved, MTD-compatible software by 7 August.
The HMRC has been pressing businesses to register before that date, adding that direct debit users must sign up earlier, by Monday 29 July.
As the deadline approaches, thousands of businesses have begun to act.
According to HMRC figures:
- About 10,000 businesses are registering for MTD every day.
- More than 600,000 businesses have signed up in total.
- More than 400,000 submissions have already been made.
- Businesses in the agriculture sector are among the fastest groups to sign up, with 50% already registered.
- The financial sector has been one of the slowest, with nearly 75% yet to register.
Theresa Middleton, director of Making Tax Digital at HMRC, said: “Now is the time for businesses with an August quarterly filing deadline to sign up and join the hundreds of thousands already experiencing the benefits of MTD.
“During this first year, we won’t be issuing filing or record-keeping penalties to businesses doing their best to comply,” Ms Middleton stressed.
HMRC expects the service to cut tax lost as a result of errors, thanks to the improved accuracy that digital records provide.
The latest tax gap figures showed avoidable mistakes cost taxpayers more than £9.9bn last year – £3bn attributable to VAT alone.
Making Tax Digital: 12 key points
- HMRC is currently sending email reminders to those who have not registered.
- Businesses can sign up for MTD at Gov.UK
- If paying by direct debit, businesses should register by 29 July (seven working days before a return is due)
- If not paying by direct debit, businesses can register at least 72 hours before their return is due
- Ensure you have MTD-compatible software and that your last pre-MTD direct debit has come out of your bank account before signing up.
- There is a full step-by-step guide to MTD for businesses on the Gov.UK website
- During the first year, HMRC will not issue filing or record-keeping penalties where businesses are doing their best to comply
- Sanctions will remain possible in cases of deliberate non-compliance
- No business will be forced to go digital for their VAT returns if they are unable to do so
- Anyone who is already exempt from online filing of VAT remains so under MTD
- Further provisions exist for those who cannot adapt to apply for an exemption
- Businesses that are registered for VAT but are below the £85,000 threshold are also not required to use the MTD service