Most charities have been enjoying a six-month delay to the requirement to enter the MTD regime, but that deferral has now come to an end on 1 October. This means VAT registered charities with annual turnover exceeding £85,000 must enter the MTD regime from the first VAT period beginning on or after 1 October 2019.
We say “most” charities as the condition for the six-month deferral isn’t based on charitable status, but it applies to all not-for-profit organisations which don’t operate as a company. Charities which are companies only qualified for the MTD deferral if they are also part of a VAT group, which most will be.
The list of deferred organisations also includes all VAT groups, VAT divisions, trusts, traders based overseas, and those using the annual accounting scheme. In addition, local authorities and public sector organisations which use the GIANT system to report their VAT details have also enjoyed the MTD deferral. However, that later group – the GIANT users – have a further deferral of MTD for VAT until at least April 2022.
If we think you should qualify for the MTD deferral, but you didn’t receive a letter confirming the deferral from HMRC, we can contact the VAT helpline on 0300 200 3700.
VAT registered organisations who operate below the £85,000 turnover level can sign-up to MTD, but they don’t have to. Those below-the-threshold organisations may wish to opt-in to MTD if they believe their turnover will exceed £85,000, as then they won’t have to monitor their turnover for the preceding 12 months on a rolling basis to check if the MTD threshold has been breached.
The sign-up to MTD should be completed at least 72 hours before the first MTD VAT return is due, or at least 7 working days before the VAT return submission deadline if the VAT is paid by direct debit.
Written by the Tax Advice Network