The regulations exempt people who are practising members of religious societies or orders whose beliefs are incompatible with the use of electronic communications, and persons to whom an insolvency procedure has been applied at the time when he would be notified of the requirement to file online.
 

That aside, it's digital for everyone else and failure to meet the new filing requirements can result in a penalty. The penalties for failure to comply with the Regulations will apply to returns made for periods after 31 March 2011, allowing businesses a period of a year to adjust before the penalties for failing to file online are imposed. 

A default surcharge may also be due if a return is filed late, but the new penalties in Regulation 25A(17) apply only to a failure to make a return by the specified method. The penalties increase according to the VAT exclusive turnover of the person failing to make the return by the required method, and are:

Turnover £100,000 and under - £100

Turnover £100,001 to £5,600,000 - £200

Turnover £5,600,001 to £22,800,000 - £300, and

Turnover £22,800,001 and above - £400

The new Regulations also specify that the due date for the return may be varied if the return is required to be submitted electronically, including a right to vary the due date if no payment is due. However, a payment return must also be paid electronically for the extended due date to apply – businesses which are normally repayment traders which very occasionally submit a return for payment should therefore ensure that they have set up a direct debit authority or other automated payment facility to avoid being caught out. [2]

Other news [3] on this topic last week included a confirmation by HMRC that agents who are not VAT registered will be able to register as VAT agents on behalf of clients once the next IT upgrade has been applied on 23 November. We shall bring you more news on this once it goes live.

HMRC has also issued a reminder of the VAT Online services events [4]which will provide support to those who want to know more about VAT Online. These will be held as follows :

Glasgow 18 November 2009

Cardiff 26 November 2009

Belfast 2 December 2009

London 8 and 9 December 2009

The Regulations which underpin mandatory online filing for VAT were approved on 10 November, and are now available as The Value Added Tax (Amendment)(No 4) Regulations 2009. (SI 2009/2978 [5]