The Making Tax Digital (MTD) project has not been derailed by Brexit (yet) and HMRC are ploughing ahead with the pilot for VAT reporting. However, as we reported in our newsletter on 18 October 2018 certain categories of businesses have had their start date for MTD deferred until their first VAT period which begins on or after 1 October 2019.
Those deferred businesses are now receiving letters from HMRC explaining that they must gear up to file VAT returns under MTD, but not until after 1 October 2019. A copy of the letter will not be sent to you as the tax agent, but you can read the standard text of the letter on the CIOT website.
HMRC started writing to other VAT registered businesses about MTD from 5 November 2018, but only to those who are eligible to join the MTD for VAT pilot. This pilot programme still excludes all businesses which are:
- a trust or a charity,
- part of a VAT group or VAT Division,
- trading in goods or services with the EU,
- based overseas,
- submitting annual returns,
- making VAT payments on account,
- a business that is newly registered for VAT and have not previously used the VAT online account to submit its VAT Return.
Small businesses which use the VAT flat rate scheme, and all partnerships, have been permitted to join the MTD for VAT pilot from mid-December 2018. However, businesses who want to join the MTD pilot must be up to date with their VAT payments and returns.
Where the business pays their VAT by direct debit, they must sign up to the pilot at least 15 days before the VAT submission date, to allow new direct debit instructions to be set up at the HMRC-end of the system.
Written by the Tax Advice Network