Making Tax Digital VAT service progress update

HMRC has provided a further update on the rollout of Making Tax Digital (MTD) for VAT.

Below are the headlines of recent weeks and information on what is planned for the coming weeks.

As August drew to a close over a million VAT businesses had signed up to MTD and submissions for the first time exceeded the number of sign-ups. Currently there are over 1.1 million businesses signed up to the VAT service, with over 1.2 million submissions having been received.

In the period leading up to the stagger 2 filing deadline on 7 September the service performed exceptionally well in handling high volumes of traffic. Almost 170,000 VAT returns were filed in the peak week leading up to the 7 September alone, with many thousands more filed in the weeks before that.

Over 230,000 mandated stagger 2 businesses (74%) have now signed up. HMRC will shortly be writing to the 80,000 businesses in stagger 2 who still need to sign up to remind them of their obligations and the need to take action now. This approach has delivered positive results in encouraging sign-ups from the monthly filers and the stagger 1 cohort.

The number of stagger 1 businesses signing up to the service also continues to increase. Since the 7 August deadline, HMRC’s nudge letters have helped encourage a further 5% of businesses to sign up to the service. Over 80% of this mandated population is now signed up and actively using the service.

By 7 October, stagger 3 businesses are due to file their first VAT return through MTD. Currently 60% have signed up to the service. To encourage further sign-ups and in turn submissions by this date, HMRC will be sending nudge emails to those businesses who still need to sign up.

Sign-ups remain HMRC’s lead indicator for monitoring compliance with the new MTD rules, as by signing up businesses are signalling their intention to comply. HMRC has received feedback that people would also find it useful to know what proportion of those who have signed up file their returns on time through MTD. Of the stagger 1 mandated group, 94% filed by their 7 August deadline. For the stagger 2 mandated group, 94% filed by their 7 September deadline.

HMRC is continuing to focus its support for businesses in helping them to move to MTD and get it right. They will not unnecessarily penalise businesses who are doing their best to make the transition.

With almost 300 telephony staff dedicated to MTD, the VAT helpline continues to perform well. The wait times overall, and especially around key filing dates when demand is at its highest, have remained within the 5 minute average wait time for August and September.

For the vast majority of business and agents the service works as intended with good feedback on user experience. However for a very small minority the experience hasn’t been as HMRC had intended and for which they apologise. They continue to make strong progress in resolving issues as quickly as possible and are using that learning to improve the services they offer going forward, to provide a positive customer journey for everyone.

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