Making Tax Digital for VAT – exemptions and scheduled maintenance

Feb 04, 2019

HMRC have now opened up the process for claiming exemption from MTD for VAT on the grounds of “digital exclusion”. MTD for VAT is otherwise mandated for businesses with turnover above the £85,000 VAT registration threshold from 1 April 2019, unless the business is classed as more complex and thus MTD for VAT is deferred to 1 October 2019. In its latest newsletter, the Charity Commission is urging trustees to ensure charities are getting ready for the implementation of MTD for VAT.

Exemptions

If a business has a genuine claim for exemption and wishes to apply then they should do so by contacting HMRC by phone using the VAT helpline, 0300 200 3700   or in writing to HM Revenue and Customs at VAT Written Enquiries Team, Portcullis House, 21 India Street, Glasgow, G2 4PZ, United Kingdom.  

HMRC will shortly be publishing detailed guidance on the process for applying for an exemption, including some examples of where a claim for exemption is likely or unlikely to succeed. HMRC is hopeful that this will prove useful as a framework for applying for exemption.

HMRC’s assessment is that there are likely to be limited circumstances in which exemptions will be applicable and thus HMRC is asking taxpayers to refrain from contacting HMRC where their case clearly does not meet the criteria for exemption.

The process of applying for an exemption is now live, but whilst HMRC upskills the relevant helpline staff HMRC expect that taxpayers will need to confirm their request in writing should they meet the criteria. HMRC expects to be in a position to make decisions on simpler cases by telephone from February on.

An agent, friend or family helper can call to request exemption on behalf of a business but should they do so they should be confident that they have a full understanding of the business’ circumstances. HMRC would recommend that, where possible, the taxpayer calls themselves as they are likely to have the fullest understanding of what they are and are not able to do and how they engage with technology in other aspects of their lives.

HMRC recognised that MTD is a big change for some businesses, especially the move to digital record keeping and understand that some taxpayers will need more support than others in order to make the transition. HMRC are therefore encouraging agents to think broadly about options that might enable clients to meet their new obligations before recommending applying for exemption.

For example, a client without regular internet access might be able to keep digital records offline (on desktop or smartphone software or by using a spreadsheet) and then pass them to their agent quarterly on a pen drive for uploading into MTD-compatible software. Or a client who is unable to use a conventional computer but who uses a smartphone might be able to select software that allows them to keep their business records via a simple smartphone app. A client who wishes to continue using a spreadsheet might be able to meet their MTD obligations by selecting bridging software.

Scheduled maintenance

HMRC will shortly be undertaking scheduled maintenance to the MTD for VAT service to enable the release of additional functionality. As a result the service will be closed from 5:30pm on Friday 8 February until 8:30am on Tuesday 12 February.

During this period, there will be no access to any elements of the service. This includes new taxpayers joining the pilot and existing taxpayers accessing their accounts, or making submissions. Taxpayers who join the service immediately before the closure may experience a delay in receiving their sign-up confirmation.

This scheduled maintenance will release additional functionality to allow HMRC to open up the pilot later in February to the majority of taxpayers within the deferral group.  HMRC have identified a time slot that should cause minimum disruption to those who have already joined the service as this falls after the 7 February filing/payment date.

If any taxpayer participating in the pilot needs to file their VAT return they should wait for the service to re-open and not revert to using the HMRC portal or their old ‘XML’ software in the interim. They can pay using their usual payment channel.

HMRC have already written to over half the businesses that are mandated from April and during February will write to all remaining businesses eligible to join the pilot. The MTD Income Tax pilot is unaffected by this maintenance.