After months of letting us do the work on their behalf, HMRC are finally writing out to warn 200,000 businesses that will be affected by Making Tax Digital (MTD). The new regulations around online submission of VAT records come into force in April 2019, so time is short! MTD businesses can’t delay in asking for the support they’ll need to get set-up.

Why have HMRC taken so long to write out to MTD businesses?

They argue that they didn’t want to write out before the MTD trial was ready to accept general businesses. Our perception though is that businesses will need time to work out which route is best for them, and decide how to structure the changes that will be needed. It’s highly unlikely that there will be a flood of registrations to the trial, but there are likely to be concerns from businesses who still haven’t been warned about MTD.

What should businesses do if they haven’t already started to plan for MTD?

If one of HMRCs 200,000 letters is the first you have heard of MTD, there are some steps you need to take:

• Speak to your Accountant as quickly as possible.
• Ask them what their recommendations are for your business.
• Be definite that you want to get things moving sooner rather than later. There are going to be a lot of changes to consider and you need time to make decisions.

If your Accountant has already raised MTD with you, but you’ve put it off, you need to take your head out of the sand now and start to get organised.

If they haven’t raised it before, you may want to consider whether they are the best advisor for you. MTD has been coming for a very long time, and good Accountants already have the majority of their clients set up. This avoids the need for last minute rushes or panics.

Will I definitely be hearing from HMRC?

No! There are some businesses that can’t join the HMRC MTD Trial yet, so they won’t hear from HMRC. These are as follows:

• partnerships
• trade with the EU
• in a VAT group
• VAT division
• based overseas
• use VAT flat rate scheme
• make VAT payments on account
• newly registered and haven’t submitted a VAT return yet
• in the surcharge system.

If I’m in one of the above categories, am I exempt from MTD?

No! You’ll get a letter later, when HMRC are ready for you to join the trial. This is likely to be later in 2018 or in early 2019.

Please don’t ignore the fact that you do need to consider how you are going to operate from April, and there are things you can do now to get ready.

MTD for VAT is mandatory for ALL VAT registered businesses for VAT periods beginning on or after 1st April 2019 except:

• Those who have been deferred.
• Those who qualify for an exemption on turnover or other grounds.

The requirement to keep digital records starts from this date but the first VAT return, for a normal quarterly period, must be submitted by 7 August 2019.

 

You can find out more about MTD in our earlier Blog posts:

Making Tax Digital – The Story So Far

Making Tax Digital Software

We’re Making Tax Digital Ready too!

HMRC Extends Making Tax Digital Pilot Scheme

If you have any questions about MTD and how it will affect your business, please get in touch. We’re working with clients who will become MTD businesses to ensure their transition to the new regime is as painless as possible!