From Tuesday 1 November 2022, businesses will no longer be able to use their existing non MTD VAT online account to submit VAT returns.

By law, all VAT-registered businesses must now sign up to MTD and use compatible software to keep their VAT records and file their returns.

In less than one month, businesses who file their VAT returns on a quarterly and monthly basis will no longer be able to submit them using their existing VAT online account, unless HMRC has agreed they are exempt from MTD.

If businesses do not file their VAT returns through MTD-compatible software, they may have to pay a penalty. Even if a business currently keeps digital records, they must check their software is MTD compatible and sign up for MTD before filing their next VAT return.

If a business hasn’t already signed up to MTD, it can choose to register itself for MTD or can ask its agent (for example, Rickard Luckin) to do this for them.

A business can apply for an exemption from MTD if it is not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis. Rickard Luckin has already successfully done this for a client.

At Rickard Luckin, we have ‘bridging software’ that enables information to be submitted to HMRC via the MTD portal even if the software on which the business maintains its records is not MTD compliant - for example, a basic spreadsheet. If you need to use such software, please speak to a member of our VAT Team.

If a business is new and is not yet registered for VAT, it will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS); although it will still need to get either the right software to submit its VAT returns, or use a bridging software, as above.

Businesses should ensure that they sign up to MTD at least five days after their last non-MTD VAT return deadline date, and no less than seven days before their first MTD VAT return deadline date to avoid paying for their VAT twice.

Businesses must keep digital records through MTD. This can be done via software. Where a business chooses to use bridging software, digital links must be in place to ensure that records are kept digitally as information is transferred between different platforms.

Since April 2022, all businesses should have been keeping digital records from the start of their first MTD VAT accounting period (which will vary for businesses).

If you have any questions please contact your usual RL contact or our dedicated VAT Team.