Estimates suggest almost 1.2m businesses will be required to file VAT returns digitally. While research carried out at the end of last year suggested 83% of businesses are familiar with Making Tax Digital and had already started to prepare, current uptake is low, although HMRC says more than 3,000 are now signing up every day.HMRC is urging businesses to get ready now and has written to every business that will be mandated with information on what they should do and how.At the beginning of March, HMRC reported just under 30,000 businesses had signed up, a figure which has more than doubled, while the rate of daily signings has risen from 2,000 to 3,000 a day.Theresa Middleton, HMRC’s director of the Making Tax Digital for business programme, said: ‘There are over 220 software products for businesses to choose from at a range of prices, including free ones, offering different levels of functionality.‘I’d urge any business affected by Making Tax Digital to start preparing now, and to join the thousands of others who are already experiencing the benefits Making Tax Digital has to offer.’Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.However, an HMRC spokesperson emphasised that April 1 is not ‘a cliff edge’.The spokesperson said: ‘Businesses will join as and when it’s right for their VAT period. The first businesses that will be mandated to file through Making Tax Digital won’t have to do so until August.’Those already using software will need to ensure it is Making Tax Digital-compatible then sign up to the new service and authorise their software for Making Tax Digital.Those businesses that are either not represented by an accountant and/or do not already use software will need to select software to use and sign up to Making Tax Digital, then authorise their new software for the online service.HMRC says it recognises that businesses will require time to become familiar with the new requirements of Making Tax Digital, and during the first year of mandation, will not issue filing or record keeping penalties where businesses are doing their best to comply. However, sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.Anyone who is already exempt from online filing of VAT will remain so under Making Tax Digital.Late paymentSeparately, ATT and CIOT are cautioning businesses that HMRC’s ‘light touch’ on Making Tax Digital penalties will not extend to the late payment of tax.Adrian Rudd, chair of the joint ATT/CIOT digitalisation and agent strategy working group, said: ‘We encourage businesses to prioritise the timely payment of VAT, even if they are struggling to comply with Making Tax Digital.‘Businesses must ensure that they pay the right amount of VAT at the right time even if they struggle or fail to keep their records digitally, or file their VAT returns through Making Tax Digital compliant software.The ATT and CIOT are also concerned that those who pay VAT by direct debit, but have problems filing their VAT returns under Making Tax Digital, may unintentionally be late paying their VAT bill. This is because the VAT return acts as the trigger for payment to be taken from their bank account. As a result, if someone files their VAT return late, their VAT payment will also be late.Direct debit payments are taken either three working days after the payment deadline (if the return is filed on time) or three working days after the date the VAT Return is filed (if late). If a business pays late as a result of filing late, they could incur a default surcharge. An appeal may be brought on the grounds there was a reasonable excuse if the late filing was due to Making Tax Digital problems outside of their control, for example software issues or an HMRC system crash.