Transition to digital VAT reporting has not been without issues

24 Jun 2019

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Many farming businesses, due to their VAT repayment position, will submit monthly VAT returns. Those filing monthly returns, and being required to report digitally under Making Tax Digital (MTD), will have now submitted their first returns under the new reporting requirements. The transition appears to have had some issues.

Martyn Dobinson, a partner and a member of Saffery Champness’ Land & Rural Group, comments:

“There have been issues with direct debits not being successfully transferred over to the new system and a number of our clients have had to complete and submit new direct debit mandates in order to be able to pay their VAT bill. If registration was completed within the correct timeframe, then any surcharges applied as a result of failed direct debits should be appealed.

“Those encountering problems have also found it incredibly difficult to get through to the VAT helpline, with callers that do manage to get through reportedly often being cut off mid-call.”

Thus far, it is only a relatively small number of taxpayers who have had to make a digital return and the pressure on HMRC’s systems is likely to increase significantly in the run up to the first main quarterly filing deadline, which falls on 7 August.

Martyn continues:

“If you submit quarterly returns and are required to report digitally, remember you will need to register for and sign up to MTD before being able to submit a return digitally.

“But you should not register until after you have submitted your last return permitted under the old system. Registration for MTD will switch off access to the old system, so we advise that you should leave registration until at least 24 hours after your last return has been submitted on the old system.”

In addition, where payment is made by direct debit, due to banking regulations, a business cannot register in the five working days after the submission deadline for the last non-MTD VAT return and must be signed up at least seven working days before the first MTD-compliant VAT return is filed. HMRC should turn MTD registrations around in three days, so timing of registration is key.