Most VAT registered businesses will be mandated into MTD for VAT from the start of the first VAT period which begins on or after 1 April 2019, but some businesses have a deferred start date of the first period beginning on or after 1 October 2019.
HMRC has released some clearer guidance on gov.uk that sets out which categories of businesses must join in the April group, and those who are deferred until October. All VAT businesses who will be mandated into MTD from April or October should have received a letter from HMRC advising them of their joining date. The letter that informs the business of a deferral to October is particularly important, as without that express permission from HMRC the business should not assume it has permission to defer.
The MTD pilot is now open to all VAT registered businesses, including all those who have a deferred start date, with the exception of overseas businesses. We will not enrol our clients into the MTD pilot before you are ready, as once you have signed-up to MTD it is nearly impossible to revert to the previous method of submitting VAT returns.
The timing of signing-up to MTD needs to be very carefully managed, particularly for businesses who pay their VAT by direct debit – which is most businesses. The direct debit mandate needs to be moved from one HMRC bank account to another, and that requires HMRC to give the taxpayer 15 working days notice.
The sign-up for MTD should not be done before the VAT return for the last (non-MTD) period has been submitted and the VAT has been paid. But the business needs to leave at least 15 clear working days before the next VAT return submission date. The CIOT has worked out the open periods for signing-up to MTD for all quarterly staggers and for monthly returns.
The first VAT return due under MTD for quarterly VAT periods on stagger 1 (quarters ending June, Sept, Dec, March) will have to be submitted by 7 August 2019, so there is still a little time to prepare all our clients.
Written by the Tax Advice Network