Chancellor Philip Hammond didn’t mention MTD in his Spring Statement speech in the House of Commons, but it was included in his written statement. This makes it clear that MTD will not be extended to other taxes in 2020, nor to any new businesses in that year.
This is a confirmed slowdown of MTD; there will be no mandation of MTD for business (income tax) until at least 2021, and no MTD for corporation tax until the cows come home. Also MTD for VAT won’t be extended to businesses which are voluntarily register for VAT until at least 2021.
In the meantime, MTD for VAT continues as planned, but you need to be aware of these points:
Some businesses assume that if they have installed MTD-compliant software that is sufficient preparation in order to file VAT returns under MTD, but it isn’t. Each business must take the additional step to sign up to MTD, or the agent can do this for them. It is very important to get this message over to clients as if they leave the signing-up process to the last few days it may be too late to file under MTD.
Time to sign up
In last week’s newsletter (14 March) we explained that clients who pay their VAT by direct debit had to sign up for MTD at least 15 working days before the VAT payment is due, but that this period could be shortened, well it has. From 19 March 2019 businesses can sign up for MTD at any time other than:
- five working days after sending a VAT return and
- seven working days leading up to the date when the next VAT return is due.
Clients with no email
To sign up to MTD (and for you to sign-up your client) the business must have a functioning email address. If your client does not have an email address, they will need to claim exemption from MTD for VAT. See section 3 of VAT Notice 700/22. You should not provide your own email address as the client’s address as the client must agree to the terms and conditions of MTD, you can not do this for them.
The voice recognition service on the VAT helpline still doesn’t recognise “MTD” or “making tax digital” as a thing people will be asking about. The VAT helpline is also very overloaded as HMRC has now written to every business which needs to start using MTD to file VAT returns, and this is the first many businesses have heard about MTD.