VAT returns delayed by technical error
Thousands of businesses were unable to file their VAT returns in early January because HM Revenue & Customs’ (HMRC) flagship Making Tax Digital (MTD) service crashed three times in three days.
Under MTD rules, the UK’s 1.3 million businesses with a turnover of more than £85,000 must send digital records for accounting periods using software that is compatible with HMRC’s systems.
However, a number of the online tools used by businesses and their agents crashed for several hours on Tuesday 7, Wednesday 8 and Thursday 9 January 2020, coinciding with the deadline of 7 January for filing VAT returns monthly and quarterly for the September to November 2019 period. This caused many of them to be late in filing.
According to HMRC, the difficulties were caused by “a few unrelated IT issues” but the Revenue acknowledged that the problems had caused the late filing and said that businesses that were unable to submit their VAT returns had been given an extra day to do so and would not be penalised.
Although HMRC claims that 94 per cent of the taxpayers who were due to file in January did so successfully, critics said the problems raise questions about the MTD programme’s IT capability.
As a spokesman for the Federation of Small Businesses (FSB) said, when HMRC insists on increasing reporting burdens for small firms, it needs to ensure that its systems are fit for purpose. He added that the UK’s productivity gap will never be closed if the owners of small firms have to spend hours a week on paperwork.
Meanwhile, a spokeswoman for the Institute of Chartered Accountants of England and Wales (ICAEW) said that MTD has not been “adequately live-tested” but “pushed through by politicans”.
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