Last week we reminded readers of HMRC’s plans to progress Making Tax Digital (“MTD”) for VAT by closing the online VAT portal for filing returns from 1 November 2022. HMRC has since contacted us to advise of a limited relaxation for businesses with turnover under £85,000. If such businesses have not signed up to MTD for VAT in time to file their next return by 7‌‌‌‌‌ ‌‌‌November 2022, they will still be able to use their existing VAT online account for that return only. Businesses that file annual VAT returns will still be able to use their VAT online account until 15‌‌‌‌‌‌ ‌‌May 2023. 

Chartered Accountants Ireland, in discussions with HMRC about closure of the portal, expressed concern that businesses not signed up to MTD for VAT in time, would be unable to file their VAT return and pay any VAT due. This relaxation by HMRC for certain businesses is a helpful time limited compromise.

Such businesses must sign up to MTD for VAT in order to file any returns due after‌‌‌ ‌‌1‌‌‌ ‌‌December 2022 if they file monthly or quarterly VAT returns, or they could face a penalty.

Businesses with turnover over £85,000, who have been mandated to use MTD for VAT since 2019, and who are still not signed up will not be able to use the online VAT portal from 1 November 2022 and cannot avail of this relaxation.

If a business is already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they are automatically exempt from MTD. Check if they can apply for an exemption sets out guidance on the exemption process. HMRC will consider each application on a case-by-case basis

Last week, HMRC began to send emails to agents to let them know about the relaxation for returns due by certain businesses by 7 November 2022. HMRC will also be contacting these businesses directly by email on Wednesday 19 October.