The Economic Affairs Committee has warned HMRC that small businesses ‘could pay a heavy price’ for Making Tax Digital for VAT (MTDfV).
The Committee stated that HMRC has ‘failed to adequately support small businesses’ ahead of the introduction of MTDfV.
MTDfV is generally set to come into effect for the from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. Under MTDfV, businesses must keep some records digitally and submit their VAT returns via an Application Programming Interface (API).
The Committee has urged HMRC and the government to ‘start listening’ to small businesses MTDfV concerns.
HMRC recently sent businesses within the scope of MTDfV so-called ‘encouragement letters’. These letters were sent to 200,000 businesses which are eligible to join the pilot scheme.