Contractors can't escape the online-only VAT man

Since April of this year, all VAT-registered contractor businesses with a turnover of £100,000, alongside all new registrants of the tax, have been required to file VAT returns and make VAT payments online.  

The Contractor UK forum shows that this £100k threshold affected some CUK readers, writes Martin McKechnie, a director at The Low Tax Group. But just recently, the taxman widened the net. In fact, HM Revenue & Customs announced that all VAT-registered businesses must do their VAT returns online and pay VAT electronically from April 2012.

Somewhat helpfully, HMRC will give you the option of continuing to file paper returns by post if you registered for VAT before April 1^st 2010. But from April of 2012, such businesses will have to follow suit, by also going electronic with their VAT returns and payments.

We recommend, as HMRC does, that business owners who have not yet registered should ensure they do so as soon as possible, to ensure they are able to meet their incoming obligations.

If you’re reading this as a VAT-registered firm that’s yet to act, you can file VAT returns using either HMRC’s online software (free of charge) or commercially-produced software.

However, whichever option you choose, you must have already registered and enrolled for the VAT Online Service before you can submit a VAT return online.

We urge all VAT-registered companies to individually explore what HMRC’s plans mean for them, and when, precisely. But it is perhaps those businesses which intend to continue filing paper returns – while they still can, who must be extra careful not to forget about preparing to settle up with a VAT man who will eventually be online-only.