Making Tax Digital for VAT has always been under criticism for delays in VAT registration & check procedures. After Covid-19 and the EU transition, VAT registration takes more than 60 working days.
One of the main reasons for the delay in VAT registration is the massive volume of online applications. Additionally, the second biggest reason for VAT Delays could be the premature application of VAT registration.
5 Reasons the UK Masses are Facing Delays
In recent years, the UK government has been making changes to the taxation system. One of these changes was to remove VAT registration for small businesses with a turnover below £85,000. This was because it would make life easier for small businesses and reduce the administrative burden on HMRC. However, in January 2019, this threshold was increased to £85,000, leading to delays in MTD VAT registration.
The increase in threshold is expected to affect about 1 million small businesses, which will need to register for VAT from April 2019 onwards instead of being automatically exempted from it as before. This has led to delays in MTD VAT registration as businesses struggle with this change.
Let’s discuss why the new online VAT system is creating turmoil and delays. It usually takes around 30 days to register VAT. Since August, the VAT registration is taking more than 12 weeks. However, the government has stated that the VAT registration issue must be resolved within 40 working days. The service level agreement was previously on 30 working days.
VAT is the first tax to get fully transitioned into a digital system. Therefore, we have comprehended why there are delays in VAT registrations.
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Covid-19 & EU Transitions
Covid-19 has been an obstacle to constructive development. Due to covid-19, making tax digital was already late introduced with limited testing by agents. The platform still needs improvement and new IT technology to support the system. And we all know that the new EU transitions have also contributed negatively to this system.
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High Volume of Application
Around 4.3 million taxpayers, including landlords and self-employed, are filing VAT and taxes. According to the report, approximately 25,000 to 75,000 VAT applications have been received by HMRC this year. However, the system is causing havoc and unlimited delays due to the high volume of online applications.
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Common Errors in Application
However, one of the significant reasons for VAT registration is common errors in applications. These common errors can be eliminated by manually intervening in the application.
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Software & Platform Limitation
Due to Covid-19, the platform has undergone minimal testing by agents. Thus the software needs more IT technology in addition to the system. Therefore the technical bodies of the UK Government have to install new IT services that are fit for purpose and have been robustly tested.
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No Planning in Advance
However, planning ahead for MTD VAT registration is beneficial and lessens the chances of delays. Before VAT registration, you may talk to an expert for planning and guidance.
Suggestion to Eliminate VAT Registration Delays
No worries, we have got your back! There are some tips to eliminate VAT Registrations Delays:
Plan Ahead
The foremost solution is to plan in advance by:
- Careful business planning
- Predicting future profit
Eliminate Common Errors in Application
After planning, try to eliminate common errors by manually intervening in;
- Application if it does not match the address
- If Trade classification does not match up with the work that the business itself carries out.
- If VAT liability is not identified
- Invalid Signatory for application
- Incorrect dates on the Application
- Wrong bank account details
- Missing supplementary forms
Talk to an Expert
If you find any trouble in VAT registration, talk to our well-trained accountant, Today.
