Making Tax Digital – 27 days to go

Mar 04, 2019

With just 27 days to go until the introduction of Making Tax Digital for VAT, are you ready? 

The Financial Secretary, Mel Stride, recently gave an upbeat statement on digitalisation of the tax system to Parliament. However with just weeks to go to both Brexit and this important change, HMRC research worryingly indicates that although 81% of VAT mandated businesses are aware of the new requirements and a similar proportion have started to prepare for the changes, only 45percent plan to sign up to the MTD VAT pilot before the April deadline.

HMRC have advised that they are now increasing external communications in advance of the introduction of MTD for VAT. Communications activity will aim to “focus the minds of businesses and agents on preparation for MTD”.

HMRC has now confirmed that businesses will be able use a 'cut and paste' approach during the one-year soft landing for MTD for VAT before digital links must be used. VAT Notice 700/22: Making Tax Digital for VAT sets out the soft landing in more detail. 

Last month HMRC opened up the MTD for VAT pilot to all businesses other than those based overseas. With the exception of overseas businesses, all those that are mandated to comply with MTD from either April or October 2019 can now join the pilot.

HMRC have also recently published the following documents relevant to MTD:-

VAT Notice 700/22 has also been updated to cover exemptions from MTD for VAT and includes an outline of the process for application. The relevant part of the Notice is Section 3. The notice also includes some examples of businesses that, according to HMRC, are exempt.

Changes have also been made to HMRC’s pages on GOV.UK that provide information on MTD-compatible software.

Firstly, to ensure taxpayers have access to information relating to the correct MTD service for them, the original page has been separated into two separate pages covering VAT and Income Tax respectively.

Secondly, HMRC have launched the first iteration of the VAT software choices viewer with a filter function, allowing the user to filter products according to criteria such as:

  • Whether the product is for a business and/or agent;
  • What features the products has (such view VAT returns, check what VAT you owe);
  • Whether it’s bridging software or full digital record keeping.