Making Tax Digital – what’s happening now?

Sep 09, 2019

HMRC recently sent the below update on Making Tax Digital (“MTD”) which sets out its approach to enforcing compliance in the first year of MTD.

Update from HMRC

“The government has confirmed a light touch approach to penalties in the first year of implementation of MTD VAT. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. 

The department’s main priority is to support taxpayers to transition to MTD smoothly, so it will not penalise businesses, instead we will send them a letter encouraging them to join without further delay [where businesses failed to sign up in time for their first MTD filing deadline]. 

We are trialling two different approaches based on compliance and behavioral insight. For each approach, there are two versions of the letter – one includes a disclaimer for businesses where the information we hold suggests their taxable turnover may be below the VAT registration threshold.   

Following feedback on the letter issued to monthly filers, we have amended the letter to make the disclaimer more prominent – it is now at the outset. 

Sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.”