Making Tax Digital (MTD)
The pilot for Making Tax Digital was offered to everyone who was VAT registered in December 2018.
There are now two start dates for Making Tax Digital. The majority will have to start filing their VAT returns via Making Tax Digital for their first accounting period beginning on or after 1 April 2019. However, some categories of businesses will have their start date deferred.
Not for all — Deferred Status
VAT-registered entities such as trusts, and not for profit organisations not set up as companies can defer their start date. Also, VAT divisions, VAT groups, public sector entities that have to give additional information on their VAT return (e.g. government departments and NHS Trusts), local authorities, public corporations, traders based overseas, businesses making payments on account, and those using the annual accounting scheme may also defer for now. If you are in the deferrals group, you should have received a letter confirming the fact from HMRC. The letter is formal legal notification of start date deferral and needs to be retained. You can’t take advantage of deferred status without it.
If you think that you should be deferred but have not received a letter you can call the VAT Helpline on 0300 200 370.
From December 2018, the ongoing pilot was opened-up to every business in the compulsory “April” start category. Sole traders, partnerships, most companies, and businesses using the flat rate scheme can all now join.
Note that once you’ve joined the pilot, you can’t subsequently defer even if you are entitled. Don’t join until you have the appropriate MTD-enabled software in place and can file your VAT return digitally.
Anyone paying by direct debit needs to be aware of a glitch in the transition that may give rise to a problem. If you pay your VAT by direct debit, you can’t sign up for the pilot in the 15 working days before the VAT submission date, or the five working days immediately afterwards. This is because HMRC needs time to move the direct debit on to the new MTD system. Make sure you allow enough time for HMRC to set up the direct debit, by signing up to the pilot shortly after the final non-MTD return liability is paid. Otherwise, you may need to pay the VAT due manually to avoid a Surcharge Liability Notice (SLN).
If you have any concerns about the switchover or require assistance please don’t hesitate to contact us.