The wave of new guidelines concerning Making Tax Digital (MTD) start to come into force in the UK today as the first deadline is due to shut.
Businesses that make payments via direct debit must register with HMRC by today (Friday 27th July) or risk possible punishment.
HMRC is urging all companies with an annual turnover above £85,000 to sign up to Making Tax Digital before the August 7th VAT filing date as the UK government looks to simplify how companies file payments.
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Sign up for Making Tax Digital
If your businesses hasn't signed up for MTD yet, you can do so via the GOV.UK website (opens in new tab).
You'll need to ensure you have MTD-compatible software and that your company's last pre-MTD direct debit has left your bank account before signing up.
MTD was first announced by the government in 2015 with the aim of making it easier for both businesses and individuals to file their taxes correctly, as well as reducing tax lost due to avoidable mistakes.
The new rules came into effect as of April 1st 2019, meaning that all companies above the VAT threshold of £85,000 must now keep digital records of their accounts and submit their VAT returns using MTD-compatible accounting software.
Along with digitising the tax system, MTD also seeks to end annual tax returns, with businesses required to update their financial data – income and expenditure – every quarter.
For those businesses not paying by direct debit, registration can be completed at least 72 hours (3 days) before their return is due.
HMRC recently revealed that around 10,000 businesses are registering for MTD every day, with more than 600,000 businesses have signed up overall.
Over 400,000 submissions have already successfully made using software, with businesses in the agriculture sector (such as farmers) have been one of the fastest groups to sign up to MTD, with 50 percent already registered.
Somewhat ironically, the financial sector has been one of the slowest to sign up, with nearly 75 percent yet to sign up.