HMRC is warning VAT-paying customers that they will not be able to use their existing VAT online accounts to submit their VAT returns from 15 May.
The tax authority has written to businesses and agents that the transitory MTD filing portal will close on this date.
All agents and taxpayers must therefore be using MTD-compatible software to file their returns or face penalties.
The VAT View and Change service closed to standard quarterly filers on 7 November 2022 but was kept open for a longer period for those who file annual returns.
HMRC chief executive, Jim Harra, said:
"To make it quicker and easier for businesses to manage their tax affairs, we'll sign up all remaining businesses to MTD unless your client is exempt or has applied for exemption and is awaiting a response from us."
To help people transition to the new MTD system, HMRC has set out a step-by-step process:
- Choose an MTD-compatible software package; a full list can be found on the Government website.
- Ensure the software has the correct permissions to allow you to file your VAT returns with HMRC.
- Maintain digital records for your upcoming VAT returns; HMRC details what records businesses must keep on its website.
- Continue to file VAT returns with your MTD-compatible software.
MTD exemptions
Some businesses may still be exempt from the switch to MTD, including those who are already exempt from filing their VAT returns online or undergoing an insolvency process.
Taxpayers can also apply for exemption if it is not reasonable or practical for the individual to use computers, software or the internet because of their age, a disability, where they live, religious beliefs or any other reason.
If a taxpayer believes they fall into the Government's criteria, they can call or write to HMRC and apply, which will review each application on a case-by-case basis.
Penalties
HMRC has also set up a new points-based penalty system for any VAT accounting periods starting on or after 1 January 2023.
If a taxpayer files a late VAT return, they will incur penalty points, which will continue to build for each late return sent to HMRC.
Once a taxpayer reaches the point threshold - which varies according to accounting periods - they will incur a £200 fine; consequential late submissions will receive the same penalty.
When a VAT payment is late by 15 days, that business will have to pay its first late-payment penalty. After 30 days, the fine will be increased, and another penalty will be handed to the business.
To help taxpayers acclimatise to the changes, HMRC will charge a first late payment penalty on VAT payments due on or before 31 December 2023.
However, this will only be the case if businesses either pay in full or a payment plan is agreed upon within 30 days of the due date.
Talk to us about Making Tax Digital for VAT.