More than one million VAT-registered businesses have now been mandated into the Government’s Making Tax Digital (MTD) programme.

The scheme came into effect on 1 April 2019 and requires any business that’s registered for VAT with a turnover of more than £85,000 to keep digital records and submit their VAT returns using MTD-compatible software.

According to HMRC, only around 100,000 VAT-registered businesses had signed up to the new regime by 1 April 2019. Since then however, businesses with VAT reporting obligations have been signing up at a rate of 4,000 a day.

Theresa Middleton, director of the MTD for business programme, commented:

“Now is the time for those businesses affected by MTD who haven’t done so already to begin preparing to switch over and start experiencing the benefits MTD has to offer. You don’t necessarily need to sign up from day one, but you do need to make sure you’re keeping your records digitally for your next VAT period which starts on or after 1 April.”

With Government estimates claiming more than a million businesses had yet to sign up before the start of last month, the Revenue reminded firms that 1 April 2019 was not a “cliff-edge” deadline.

For the majority of businesses, which file VAT quarterly, the first returns under MTD will not be due until 7 August 2019 at the earliest.

HMRC has also said it will take a “light-touch approach” to penalties in the first year and will not issue fines where businesses are doing their best to comply with MTD.

Mel Stride, financial secretary to the Treasury, said:

“Delivering MTD for VAT is the first step toward our ambition to create one of the most digitally-advanced tax authorities in the world. The rules will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.”