Exemptions Announced for MTD for VAT

MTD for VAT will come into effect from 1 April 2019. From this date businesses above the VAT threshold will be required by law to file their VAT every quarter via a digital system connected directly to HMRC or via a third party digital link.

Once a business is registered, they will be required to remain registered even if they fall below the threshold at a later date. A company would have to deregister in order to no longer be required to file.

After many months of trialling a pilot of the scheme and a call to the government to delay the introduction of MTD while we head towards an uncertain Brexit negotiation, HMRC have announced that although the scheme will go ahead as planned they understand the great task that it may be for some businesses.

 

What’s the news from HMRC?

While HMRC has been testing a pilot for Making Tax Digital for VAT for some businesses, it has now announced a deferment for some other businesses who will not be mandated to file digitally until October 2019. This is to ensure that the businesses which have more complex requirements will be successful in their transferal to the new system, after sufficient testing within a pilot service.

Those included in the deferral are the following types of business:

• VAT groups
• VAT divisions
• Non-resident traders
• Trusts
• Businesses on annual accounting
• Unincorporated charities
• Businesses on payment on account

 

The deferral will also apply to those who will be required to provide additional information, such as government departments and NHS trusts. It will also apply to public corporations, local authorities, annual accounting scheme users, traders based overseas and trusts and ‘not for profit’ organisations which are not set up as a company.

 

When does it start?

Those not covered by the 6 month deferral will need to keep digital records and file digitally from the start of the first VAT return period beginning on or after 1 April 2019. Those covered by the deferral have until 1 October.

Please see the table below for further details:

 

First mandatory MTD for VAT return period	Digital accounting records must be kept from:	Deadline for filing first mandatory MTD for VAT return 1
1 April 2019 – 30 June 2019	1 April 2019	7 August 2019
1 May 2019 – 31 July 2019	1 May 2019	7 September 2019
1 June 2019 – 31 August 2019	1 June 2019	7 October 2019

 

 

There is still plenty of time to make arrangements for your business if you have not already done so. We urge business owners to contact us for any information or further details regarding MTD and how you can make sure you are prepared.