Award-winning Cumbrian accountancy firm, Lamont Pridmore, is calling on businesses to seek advice if they have any questions regarding the new digital tax regime.
Making Tax Digital (MTD) for VAT was launched in April 2019 and thousands of VAT-registered businesses above the VAT threshold (£85,000) across the region are now recording and reporting their affairs digitally to HM Revenue & Customs (HMRC).
With many facing their first reporting date in the coming months, the firm said that nationally there had been issues identified with confusion surrounding registration for MTD, which left them concerned about local businesses.
HM Revenue & Customs (HMRC) has warned businesses across the UK that the registration process for Making Tax Digital (MTD) for VAT takes seven working days.
This means that VAT-registered businesses need to register more than seven days before submitting their first return if they want to pay their tax bill by direct debit. Registering involves setting up a Government Gateway user ID and ensuring compatible software is in place.
Graham Lamont, Chief Executive at Lamont Pridmore, said: “Businesses are currently benefiting from a ‘soft landing period’, which will last up to a year, to get MTD for VAT in place and be reporting their affairs accurately to HMRC without facing a penalty.
“However, many aren’t aware that they must register for the scheme in order to use it and have everything in place by their first reporting date. While we have seen many businesses take some of these steps, we are worried that many more might not be fully prepared for this new tax regime.”
Graham said that looking ahead MTD would likely affect more businesses as the Government looks to extend the system to other forms of tax by April 2021 at the earliest.
This new process will require a far larger number of businesses, including those which may be individually below the VAT threshold, to report their affairs digitally on a quarterly basis, this includes sole traders with income from one or more business, as well as income from letting UK property.
Chris Lamont, a Partner at Lamont Pridmore, added: “HMRC is currently in the process of testing and releasing information on software and the options for Income Tax and Corporation Tax, so businesses outside of the net of the current regulations should also start becoming aware of what their future obligations may be.”