More than a million VAT-registered businesses have now been mandated into the Government's Making Tax Digital (MTD) programme, which came into force on 1 April 2019.

Under the scheme, businesses that are registered for VAT with a turnover of more than £85,000 are required to keep digital records and submit their VAT returns using MTD-compatible software.

According to HMRC, only around 100,000 businesses have signed up to the new service so far, although a further 4,000 are signing up every day.

While this suggests as many as 900,000 businesses have yet to sign up, 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 won't be due until 7 August 2019 at the earliest.

HMRC also said it will take a "light-touch approach" to penalties, 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."

Talk to us about Making Tax Digital.