The first big test for Making Tax Digital for VAT (MTDfV) is history. There was a fairly high failure rate but not as bad as originally feared. What lessons were learned and how might they help you overcome future MTDfV problems?

First test for businesses and MTD

The deadline for the first mandatory filing of quarterly VAT returns using HMRC’s Making Tax Digital for VAT (MTDfV) service was 7 August 2019. It applied to businesses in the so-called “stagger one group”, that’s those whose VAT quarter ended on 30 June 2019. Two hurdles needed to be cleared to comply with MTDfV: registration and using software compatible with HMRC’s new system to submit the VAT figures.

How did businesses fair?

HMRC’s statistics show that only 76% of businesses registered for MTDfV in time. This meant that at least 24% stood no chance of meeting the 7 August deadline. There were over 60,000 VAT filings per day and over 900,000 VAT returns were filed by the 7 August deadline. As this figure included businesses which file their figures monthly we don’t know, or HMRC isn’t saying, how many of the 76% that registered on time also managed to submit their figures before the deadline. HMRC acknowledged that many businesses experienced issues with the registration and filing processes.

Registration issues

Some businesses overlooked the tighter registration window because they paid their VAT bill by direct debit. This is something to remember if you still need to register for MDTfV, especially businesses whose last VAT quarter ended on 31 August. Another issue was that some businesses weren’t sure if they had successfully registered. This was because HMRC was slow in sending confirmatory e-mails. These were supposed to arrive within 72 hours. Tip. HMRC’s advice is that if confirmation of registration doesn’t arrive when expected don’t attempt registration again. Also, don’t try filing your VAT return until confirmation does arrive as HMRC’s system won’t recognise your details.

No filing confirmation

Don’t expect an e-mail from HMRC to say your VAT return has been received. It’s not sending any. This change from the old system caused considerable concern for some businesses and accountants. The good news is that some software will let you know when your VAT return is accepted. Tip. If you haven’t bought MTDfV software yet, confirmation of submission of your VAT figures is worth looking for when you do. Lack of confirmation could spell problems down the line if you need to prove to HMRC that you genuinely thought you had filed your VAT figures on time.

Other problems

Another bugbear is that HMRC’s system doesn’t make clear if the cause of any filing problems is at its end or yours. For example, before starting the transfer of VAT data your software “shakes hands” with HMRC’s computer and sets up the obligation to file. In August this didn’t always go smoothly which left businesses not knowing how to proceed. Tip. Use HMRC’s service availability and MTD error codes to identify where the problem is (see The next step ).

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