On 7 August 2019, the first quarterly VAT returns under Making Tax Digital (MTD) will be due.

This marks a key stage in the MTD programme, which became law on 1 April but will affect businesses at different times depending on their VAT return period.

The August deadline applies if your business is included in MTD for VAT, and if your return period was from 1 April 2019 to 30 June 2019.

You’ll need to make sure you’re registered for MTD before you send your first return on the scheme.

So far, HMRC says more than 600,000 businesses have signed up, with a further 10,000 registering every day.

Which businesses are included?

Businesses with an annual turnover above the VAT-registration threshold of £85,000 are required to keep digital records and use software for VAT returns.

Further developments to MTD are planned, which will eventually extend the scheme to income tax and corporation tax, but these are not expected until April 2021 at the earliest.

Making Tax Digital deadlines

The MTD deadlines are different depending on when your VAT return periods fall after 1 April 2019.

Businesses with a VAT period from April to June were required to keep digital records from 1 April, and will need to submit their return by 7 August.

Those with a period from May to July had to start keeping digital records from 1 May, and their return deadline will be on 7 September.

And for businesses with a VAT period from June to August, the digital record-keeping start date was on 1 June, and returns must be submitted by 7 October.

How to register for Making Tax Digital

You should register for MTD before making your first return, but not before you’re ready to start making VAT returns on compatible software.

HMRC says those with a 7 August deadline will need to register by 27 July if they’re paying by direct debit.

This is something we can handle on your behalf, so contact us if you have any questions about registering for MTD.

What happens if you don’t comply?

MTD is a legal requirement, so there are non-compliance penalties for businesses that don’t meet their obligations.

During the first year, however, HMRC has said it will take a light-touch approach, and won’t fine businesses that are “doing their best” to comply with the rules.

From 2020, penalties will be decided on a points-based system depending on the severity of the issue.

Helpline delays

Recent reports suggest the roll-out of MTD, coupled with administrative pressures of preparing for Brexit, has caused delays for people trying to get through to HMRC support.

The HMRC helpline answered less than 42% of calls in May, and those that were answered had to wait 16 minutes on average.

As the return deadline draws closer, it may be harder to get through to the helpline, so make sure to leave time for any issues that come up.

Get in touch

We can help with any aspect of VAT, including registration, VAT planning and administration, and completing and submitting returns.

We also work with KashFlow, which is an MTD-compliant option for cloud bookkeeping.

Contact us to find out more about our VAT service.