HM Revenue and Customs have confirmed that, from April 2012, all businesses will have to complete online VAT returns and pay their VAT liabilities electronically.

Many businesses already have to comply with these rules, however smaller businesses, registered prior to 1 April 2010 with an annual turnover of less than £100,000, can currently complete paper VAT returns and pay by non-electronic means. These companies will be brought in line from April 2012 so that all VAT processing will be done electronically.

Although the changes for smaller business are some way off, they should start to prepare now. Set up the login and password details that will be needed and process at least one VAT return on-line before the April 2012 deadline to ensure everthing works correctly.

HMRC have given plenty of notice of the changes and will not be very sympathetic if returns or payments are not made corectly after that date.