On 7 August HMRC reached a significant milestone in the rollout of Making Tax Digital (MTD), with the first quarterly filing deadline for VAT.
HMRC have been encouraged by the numbers who have signed up and submitted their VAT returns through MTD. There are now nearly one million businesses in the service who have made over 900,000 VAT submissions. As at 7 August 370,000 (76%) VAT registered businesses above the threshold in stagger 1 had signed up. This is in line with their expectations, particularly given the public commitment they made up front to taking a light touch approach to digital record keeping and filing penalties during the first year.
HMRC’s focus during this period has been to support businesses moving to MTD to get it right, not to unnecessarily penalise businesses who are doing their best to make the transition.
HMRC are now writing to the businesses who did not sign up to encourage them to join as soon as possible and expect numbers to increase significantly in the coming weeks as a result. They took this approach with monthly filers, whose first return through MTD was due by 7 June. 89% (40,000) of that group have now joined the service. They are also continuing to see non-mandated businesses joining on a voluntary basis and sign ups from businesses in stagger 2 (179,000) and stagger 3 (124,000) are accelerating in advance of their first submission deadlines on 7 September and 7 October respectively.
In the period leading up to the stagger 1 filing deadline on 7 August the service performed well, handling high volumes of traffic. Over 60,000 submissions were filed per day at peak times and 19 businesses even filed their returns in the minute before midnight.
Businesses and agents also rose to the challenge. HMRC understand that in getting to a position where they felt comfortable submitting their first returns under MTD many have invested significant time and effort to research and prepare and they would like to thank all of those who worked so hard to make this a smooth transition for the majority of businesses.
Those who have now switched to digital record keeping and signed up and submitted their first return have taken the biggest step in the MTD for VAT journey.
HMRC know that being able to get support through the VAT helpline is very important for businesses. They deployed additional staff to the helpline in late July in anticipation of a peak in demand in advance of the 7 August deadline, helping deliver an average wait during that week of five minutes.
The helpline achieved an average wait time of less than five minutes for the whole month of June and for most of July, with the exception of two weeks in July (commencing 1 and 29 July in the build up to peak weeks) when average wait times rose to around seven minutes before returning to normal levels.
HMRC are pleased with the progress made so far but acknowledge a small proportion of users experienced issues when trying to meet their obligations and HMRC apologise for the frustration and worry this may have caused. They will continue to improve the service so in future every business is able to experience the smooth process that was enjoyed by the majority. Over the coming return deadlines HMRC will continue to monitor progress in the roll out of the VAT service and take stock of the lessons learned when considering the future direction of MTD.