Time is fast running out for VAT-registered businesses to be ready for Making Tax Digital filing.

From the start of next month, organisations will no longer be able to submit VAT returns through their existing online account.

By law, all VAT-registered businesses must sign up to Making Tax Digital (MTD) and use compatible software to keep their VAT records and file their returns.

Richard Fuller MP, Economic Secretary to the Treasury, said: “Making Tax Digital can help businesses get their tax right first time, which cuts the administration burden and frees up time for them to get on with what matters most to them – growing their business.

“I encourage any VAT-registered businesses still to register for Making Tax Digital to get online and sign up.”

MTD’s aim is to help businesses reduce errors in their returns, making it easier for them to manage their tax affairs, and consequently helping them to grow.

More than 1.8 million businesses are already benefitting from the service, and more than 19 million returns have been successfully submitted through MTD-compatible software so far.

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 return.

If a business has not already signed up to MTD or started using compatible software, they must follow these steps now:

1. choose MTD-compatible software – a list of software, including free and low-cost options, can be found on GOV.UK.
2. check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’.
3. keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK.
4. sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.UK and search ‘record VAT’.

If a business is already exempt from filing VAT returns online, or if their business is subject to an insolvency procedure, they will automatically be exempt.

If a business is new and is not yet registered for VAT, they will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS).

A range of accessible help is available online through GOV.UK, webinars and videos as well as through HMRC’s Extra Support Service. Thousands of people have also benefitted from HMRC’s live webinars, which offer support on filing digitally and explain how it can help businesses. HMRC is continuing to communicate directly with businesses and agents to support them as they transition to MTD for VAT.

Are you unsure what to do? Get in touch for our help.

Anyone planning to complete a tax return for 2021-22 must notify HM Revenue and Customs (HMRC) by Wednesday.

Before customers can complete their first tax return, they need to register with HMRC to receive their Unique Taxpayer Reference (UTR) which they need to file a return.

The tax return deadline for the 2021 to 2022 tax year is 31 October 2022 for those completed on paper forms, and 31 January 2023 for online returns.

HMRC is encouraging customers to plan ahead to give themselves the best chance to complete their Self Assessment on time. Customers who file early will benefit from knowing what they owe, allowing them to budget and pay at a time that suits them. If customers are due a refund, they could get it back quicker. Customers have until 31 January to pay any tax owed.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “By registering early, Self Assessment customers will have plenty of time to prepare and access all the help available to them before they start their first tax return.

“Help and support is available to anyone completing a return, just search ‘Self Assessment’ on GOV.UK.”

Customers can check if they need to complete a tax return by using the free online tool on GOV.UK. Customers who are new to Self Assessment for the 2021 to 2022 tax year may include:

• those who are newly self-employed and earned more than £1,000
• a new partner in a business partnership
• those who have received any untaxed income
• those claiming Child Benefit if they or their partner have an income above £50,000
• Self-employed customers must also register for Class 2 National Insurance contributions.

The easiest way to complete a tax return is online. Once a customer is registered for Self Assessment, they can use their UTR to access their tax return, as well as details of their income or earnings and other financial records. Detailed information on what documents are needed for Self Assessment are on GOV.UK.

For customers who have already filed their tax return but still need to pay any tax owed, they can visit GOV.UK to find out more about the payment options. Customers can now make Self Assessment payments quickly and securely through the free HMRC app.

If anyone is worried about paying their tax bill, support is available on GOV.UK, for example if customers are unable to pay in full, they may be able to set up a monthly payment plan online if the tax owed is less than £30,000.

All Self Assessment customers need to be alert to the risk of criminals emailing, calling or texting claiming to be from HMRC. Scams come in many forms – some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing and HMRC advises customers to take their time and check scams advice by searching for ‘HMRC scams’ on GOV.UK.

HMRC also urges customers never to share their HMRC login details. Someone using them could steal from the customer or make a fraudulent claim in their name.

If you need any advice, get in touch to arrange an appointment.

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)

19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.

19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

1 November 2022 – Due date for Corporation Tax due for the year ended 31 January 2022.

19 November 2022 – PAYE and NIC deductions due for month ended 5 November 2022. (If you pay your tax electronically the due date is 22 November 2022.)

19 November 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2022.

19 November 2022 – CIS tax deducted for the month ended 5 November 2022 is payable by today.

Make sure your payment will reach HMRC’s bank account by the payment deadline. You may have to pay a surcharge if you do not pay on time. If you are not sure of the actual payment deadline you can use the VAT payment deadline calculator to work out how much time to allow.

To make payments on the same or next day

• online or telephone banking (Faster Payments)
• through your online bank account
• CHAPS

To make payments within three working days

• Direct Debit
• Bacs
• standing order (only for businesses using the Annual Accounting Scheme or Payments on Account)
• online by debit or corporate credit card
• at your bank or building society

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day before (unless you pay by Faster Payments).

Although finance costs, predominantly loan interest, are now disallowed as an expense that can be utilised to reduce taxable rental income, these charges do qualify for a tax credit limited to 20% basic rate Income Tax. For example, if your loan/mortgage interest amounts to £10,000 this cannot be used to reduce your rental income. It will simply reduce your Income Tax bill by £2,000 (£10,000 x 20%).

However, there are three hoops that these claims need to jump through. The tax deduction is worked out as the lower of:

• 20% of any finance costs – costs not deducted from rental income in the tax year plus any unrelieved finance costs brought forward, in the above example £2,000;
• 20% of property business profits – the profits of the property business in the tax year (after using any brought forward losses); and
• 20% of adjusted total income – the income (after losses and reliefs and excluding savings and dividends income) that exceeds your personal allowance.

It is the final condition that can catch taxpayers out and deny relief. For example, if the majority of earnings are dividend income, and other earnings in total are lower than the annual personal tax allowance, currently £12,570, then no relief for finance charges can be claimed.

This could impact director shareholders of smaller companies with personal property income and finance costs, who many have adopted the high-dividend low-salary approach to taking remuneration from their company

This is a further justification for ongoing tax planning to ensure that all options are considered and reviewed to minimise overall tax payments.