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Where are we now with Making Tax Digital for VAT?

Caroline Miskin reflects on the transition to Making Tax Digital for VAT – has IT been a success? Are businesses now compliant? And she also looks at the next steps.

MTD Complying with the Making Tax Digital (MTD) for VAT regulations is now mandatory for businesses with taxable turnover above the VAT registration threshold of £85,000. The start date for most businesses was their first VAT period starting on or after 1 April 2019; the start date was deferred to 1 October 2019 for certain types of businesses and is extended indefinitely for those that use the VAT GIANT system (government departments and other bodies).

As at mid-November 2019, almost 1.3 million businesses had signed up to MTD for VAT and more than two million returns had been filed. Approximately 75% of businesses signed up in time for their first mandatory MTD for VAT return, and the compliance rate is now more than 90% for monthly filers and those in the first stagger group. Of those that signed up in time for their first mandatory return, 94% went on to successfully file their first return. Between 200,000 and 300,000 businesses with taxable turnover below the VAT threshold have signed up voluntarily.