changes to filing in 2021

There will be changes to filing in 2021, currently HMRC’s VAT records are currently held across two databases.

The newer one holds the records of businesses that have signed up to Making Tax Digital for VAT. HMRC is planning to consolidate all VAT records onto the new platform in stages during 2021, in advance of MTD for VAT becoming mandatory for all from April 2022.

The changes to filing will not affect businesses that have already signed up to MTD for VAT but will impact VAT registered businesses that have not yet signed up to MTD.

The online VAT return available on gov.uk will continue to have the same nine boxes but will look different. Businesses will be able to access the return from their business tax account as they have done previously.

Online filing via XML software (the system used by commercial VAT filing software before MTD which is still used by some non-MTD software products) will cease to be available from 8 April 2021. HMRC has already notified software companies and they plan to write to each affected trader before April 2021.

Businesses that pay by direct debit will be asked to ensure that HMRC holds a valid email address for the business. This will allow HMRC to comply with banking regulations which require it to notify businesses of the date and amount to be taken by direct debit. HMRC plans to write to each business that pays their VAT by direct debit, asking them to supply or confirm their email address by 28 February 2021.

Without a valid email address, HMRC will be unable to collect VAT payments by direct debit.

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