HMRC are reminding businesses that new rules on how VAT returns are submitted and payments are made will come into force next year. Paper VAT returns will be phased out from 1 April 2010.
As a start of this phasing out process, businesses with:
- annual turnover of £100,000 or more, and
- all businesses which register or should have registered for VAT on or after 1 April 2010
will need to submit their VAT returns online and make payments electronically from April 2010. Those businesses that are already VAT registered, with a turnover below the threshold, will have the choice to use paper returns but this will be reviewed by 2012.
Further guidance has been issued together with details of the penalties for failing to make an electronic return. The penalties will be:
- turnover £100,000 (VAT exclusive) and below – £100
- turnover £100,001 to £5,600,000 – £200
- where turnover exceeds £5,600,000 the penalties charged will be higher.
HMRC have announced a period of grace which means that penalties will not be imposed initially, however periods ending on or after 31 March 2011 will be charged. This grace period is to allow businesses to adjust to the change in procedures.
HMRC have also announced simplified procedures for agents to submit their clients VAT returns, so please do get in touch if you would like any further advice in this area.