Self-Employed Workers Could Miss First MTD Deadline
Many self-employed workers could miss the deadline for filing their first digital VAT returns, due to a last-minute rush for professional advice, according to tax specialists at accountancy firm, Menzies LLP.
An upturn in demand for advice about Making Tax Digital from self-employed workers, who are required to file their first digital VAT returns by 7th August 2019, is putting pressure on accountants.
Making Tax Digital (MTD) forms part of the Government’s strategy to help individuals and businesses improve their financial planning and the management of their businesses.
When preparing their VAT returns, self-employed workers will be required to sign up to HMRC’s MTD service and make their submissions online for the first time. For individuals who file quarterly and whose VAT quarter ended on or after 30 June 2019, the first digital returns will be due on 7th August 2019.
It is widely recognised that self-employed individuals with a taxable income above the VAT threshold of £85,000 are required to join MTD, however, those below the threshold can choose to join voluntarily, should they wish.
David Truman, private client tax partner at accountancy firm, Menzies LLP said: “Now is the time for self-employed workers to sign up to MTD and familiarise themselves with any new systems. Advance preparation is key to ensuring that individuals don’t fall foul of the new rules. Anyone failing to make VAT payments online and on-time could face penalties for the underpayment of VAT.”
For some time, HMRC has been pushing for changes to the tax return process – it is hoped that going digital will improve accuracy and ultimately cut the amount of tax lost as a result of errors, both deliberately and accidentally.
“Whilst every business is different, for self-employed workers, having a dedicated MTD ready accounting system or spreadsheet with ‘bridging’ software to HMRC can ensure that all information is up-to-date and immediately available.
“Even in the digital age, payments aren’t always instantaneous so leaving a buffer can help avoid any costly mistakes. When paying by direct debit, individuals should register by 29 July (seven working days before a return is due). Alternatively, for those not paying by direct debit, individuals can register at least 72 hours before their return is due.
“The government’s movement to a fully-digital system is inevitable, so self-employed workers need to act fast to get measures in place. If individuals need further guidance on online filing, seeking the assistance of an accountant, tax adviser or book-keeper can help to keep tax on track.”