More than 120,000 VAT-registered businesses in the UK missed the August deadline to file returns through Making Tax Digital (MTD).
HMRC confirmed that around 116,000 businesses with quarterly obligations and 5,000 firms that file monthly returns did not sign up in time.
Most VAT-registered businesses with annual taxable turnover of more than £85,000 have to keep digital records for periods starting on or after 1 April 2019.
Usually, non-compliant businesses would expect a fine of up to £400 for missing their VAT return deadline. These penalties increase each quarter the return is incorrectly filed.
But HMRC is adopting a light-touch approach to penalties until 1 April 2020, to give businesses enough time to adjust.
More than a million firms have been mandated so far, including around 200,000 businesses with turnover below the £85,000 VAT-registration threshold.
Jim Harra, deputy chief executive at HMRC, said: “We are very pleased that over a million businesses have signed up and thank them for joining.
“Our ambition is to help businesses moving to MTD to get it right, not to penalise them.
“HMRC’s decision not to enforce penalties will help businesses transition to MTD without fear of getting it wrong.”
Manual books and records will no longer be allowed under the new regime and many businesses have fully utilised the efficiencies offered from moving to digital books.
Many of the digital systems can help business owners save time with book-keeping which helps free up time to spend on other aspects of the business.
With less than twelve months of the light-touch filing regime left to run it is advised that businesses at least have a detailed plan of how their book-keeping and VAT filing will become compliant with the new regime.
For anyone uncertain of their position with MTD it is advised to speak to their professional advisors. Here at NR Barton we have a team dedicated to offering market leading advice for Making Tax Digital, including all aspects of cloud and online accounting.
