As we all know, and no doubt have been continuously reminded of over the past six months or so, Making Tax Digital for Business (MTDfB) will commence for all incorporated and unincorporated businesses above the VAT threshold (currently £85,000) from April 2019. And with less than nine months until implementation, H M Revenue & Customs (HMRC) have recently announced details regarding their MTDfB penalty system.
The proposed penalty regime states that penalties will be enforced within 15 days of an overdue tax payment. Fortunately, HMRC have realised the challenges businesses may face in getting to grips with using the new digital system and have therefore confirmed there will be an initial grace period of one year for late filers of returns struggling with the software. Despite several concerns being raised regarding this penalty system during its consultation period, the Government insists the regime will go ahead regardless.
So how will the MTDfB penalty system work? Penalties will be calculated on tax still owed after 15 days from its original payment due date. If a payment is made or a Time to Pay (TTP) agreement has been sought between 16 and 30 days after the original due date, the penalty will be reduced by 50%. Those who fail to pay overdue tax within 30 days of the original due date will be charged a full penalty fine, along with an additional daily penalty which will be accrued until payment is made or a TTP agreement has been sought.
With the potential risk of having to pay, what could result in substantial penalties for non-compliance of MTDfB, businesses need to embrace the challenges in implementing MTDfB and put procedures in place as soon as possible.
MHA MacIntyre Hudson offers a wide range of services and support to assist you with meeting your obligations under MTDfB. Whether you simply need advice on software or you are looking for us to take the burden of quarterly reporting off your hands entirely, MHA have the right package to cater for your needs.
For any advice on implementing digital systems or for further information on what MTDfB means for you, please contact:
Donna Dallas, Accounts Manager
MHA MacIntyre Hudson
03330 100 221