HMRC is trialling a forced closure of the online VAT return for 800 businesses that should be complying with Making Tax Digital for VAT. Businesses will not be able to file VAT returns due on 7 October 2021 unless they have signed up to MTD VAT.

Making Tax Digital for VAT (MTD VAT) became mandatory for businesses with taxable turnover over the VAT-registration threshold of £85,000 in April 2019. More than two years later almost 90% of those that should have signed up have done so, but around 100,000 have not.

HMRC compliance activity directed at these businesses was delayed due to the coronavirus pandemic but is now being stepped up and they will have each received multiple letters. In May 2021, HMRC wrote to 800 traders to warn them that the online VAT return would be closed to them and that this would take effect from their June-August 2021 VAT return, due on 7 October 2021.

HMRC will assess the impact of this trial of forced closure of the online VAT return and may consider extending it to more businesses. In the meantime, businesses expecting to file their June-August VAT return via HMRC’s online VAT return should check at an early stage that this option is available to them. For those that have not yet registered for MTD VAT, the process can be completed in a few hours if they have the appropriate software in place.

Signing up for Making Tax Digital for VAT – for businesses

Businesses that will be filing their own MTD for VAT returns need to follow the preliminary steps of understanding the MTD for VAT requirements, agreeing responsibilities with any third party bookkeeper or agent and choosing MTD for VAT software.

Signing up to Making Tax Digital for VAT – for agents 

Agents who will be providing MTD for VAT services to clients need to follow the preliminary steps of understanding the MTD for VAT requirements, agreeing on responsibilities with clients and choosing MTD for VAT software.