In order to sign-up for MTD for VAT you need your unique taxpayer reference (UTR) number and your VAT number. This make sense since VAT registered taxpayers with a turnover of over £85,000 must surely also be registered with HMRC for income tax or corporation tax, and have a UTR number or equivalent corporation tax number.
However, where there is a shared interest in a property, which is not technically a partnership for income tax purposes, this joint venture may not have a UTR number. The joint owners will report their share of profits or losses from the property on their own tax returns, but the joint venture won’t registered as a partnership with HMRC.
If the property is subject to an option to tax there will be a need to register for VAT, and also register for MTD where the turnover exceeds £85,000. Until recently the VAT helpline was instructing such joint property ventures to register for income tax as a partnership with HMRC in order to get a UTR number. This is certainly a round the houses solution, and may cause other problems, such as penalties for not submitting partnership tax returns.
HMRC has recently confirmed to the CIOT that a system update has upgraded the MTD registration process so that VAT registered joint ventures which do not have a UTR number can now register for MTD.
Written by the Tax Advise Network