The landscape of VAT registration in the UK is set for a significant shift as HM Revenue & Customs (HMRC) announces the transition to a fully digital process.
Beginning 13 November, as part of the Making Tax Digital (MTD) initiative, all VAT registrations will be conducted through the online VAT Registration Service, accessible via the Government Gateway account.
This change is designed to streamline the registration process, enhance security, and make the system more efficient for both businesses and HMRC.
However, it is essential to acknowledge that certain business categories, such as those enrolling in the agricultural flat rate scheme, overseas partnerships, and entities lacking a unique tax reference (UTR) number, are not yet supported by the online service.
These businesses will need to wait until the service is expanded to include them.
Who can still use paper registrations?
For taxpayers who qualify for specific exemptions, a paper-based registration remains an option.
To obtain a paper form, you must contact HMRC directly and justify the inability to register online.
It is worth noting that processing a paper application can take up to 40 days.
Currently, a significant majority of firms, approximately 95 per cent, already utilise online registration.
The impending mandate may present a challenge for the remaining 5 per cent who have yet to embrace this method.
At Moore Thompson, we have identified a few significant benefits of the new online-only changes.
These include:
- Quicker receipt of VAT numbers
- A reduction in paperwork
- Enhanced security
Digital registration reduces the risk of sensitive information, such as legal representatives’ passport details and trade register information, being compromised through post or email.
As HMRC aims to digitise all tax transactions to cut costs and aims to reduce call centre staffing by 30 per cent by the end of 2024, our commitment to supporting customers through this transition remains firm.
We intend to continue using the online system and are willing to answer any questions you might have on the subject.
Looking ahead, I would anticipate further shifts to a digital tax world with little room for paper-based processes.
It is important to be prepared and proactive in the face of these changes, so please feel free to reach out and I would be willing to answer any of your questions.
My thoughts on the new changes
From my reading of HMRC’s move towards Making Tax Digital, there are numerous benefits.
Faster processing, enhanced security, and reduced administrative burdens are outcomes we can all support.
As an accountant, I recognise the trepidation that some businesses may feel towards this digital leap – especially the small percentage that have relied on traditional methods.
In my opinion, the success of this initiative rests on HMRC’s ability to provide robust support systems and maintain a secure, user-friendly online platform.
The focus must be on inclusivity, ensuring that every taxpayer, regardless of their digital proficiency, has access to the necessary tools and support to comply with these new requirements.
In addition, the importance of digital security cannot be overstated, and HMRC should be seriously considered in its approach to the subject.
The changes mirror HMRC’s prior initiatives through the Making Tax Digital for VAT policy to transition the entire VAT process online.
There is a significant drive from the Government to digitalise legislative and regulatory procedures from the outset, which is an adjustment we will all need to embrace.
We are in the thick of a digital revolution in tax administration, and it is imperative to maintain a dialogue between all stakeholders to ensure that this transition is as smooth as possible.
If you have any questions on the impacts of digital VAT registration on your business, please do not hesitate to contact me or my team.
You can email me at: heather@mooret.co.uk, or find out more about our VAT services here.