HMRC estimates that around 100,000 businesses have an annual turnover that requires them to join the MTD for VAT regime, but they haven’t signed-up yet. These businesses are still submitting VAT returns through the old HMRC portal (online form).
HMRC has the power to impose penalties of £400 for failure to use MTD-compatible software to file the VAT return, when required to do so, but it has preferred to use a nudge-letter approach. However, that is about to change.
Around 800 businesses will shortly receive a HMRC letter that says they will be able to file their VAT return for the period ending in March, April or May, up until 7 July 2021 using the online form, but that portal will be closed to them after that date. From that point on the business will be forced to use MTD compatible software. If the response to this pilot-run is positive HMRC will roll it out to the rest of the 100,000 MTD refuseniks.
Where our clients have not signed up to MTD for VAT, we may be submitting your VAT returns through the old online portal. When doing so we may find the submission is blocked. If we check our Agent Services Account (ASA) the client record it will say the client has signed up to MTD. This is incorrect.
The problem has been caused by HMRC migrating all VAT registered businesses from their legacy VAT mainframe to the integrated Enterprise Tax Management Platform (ETMP). To remove the blockage and allow you to file the VAT return you need to:
- Log into your ASA
- Go to ‘view and change’
- Find the clients who haven’t signed up to MTD and mark them as such
If that procedure doesn’t work you will need to call the HMRC VAT helpline:0300 200 3700.
Written by the Tax Advice Network