Are you ready for Making Tax Digital for VAT?

UK Gov Website on a Computer Screen looking at the Making Tax Digital Page

Are you ready for Making Tax Digital for VAT? HMRC announced that its Making Tax Digital for VAT (MTDfV) pilot is now open to everyone who has to comply with MTDfV from 1 April 2019. Others will be able to join soon.

What is Making Tax Digital?
Making Tax Digital is a crucial part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their financial affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is transforming tax administration so that it is:

  • more effective
  • more efficient
  • easier for taxpayers to get their tax right


Making Tax Digital for VAT
VAT-registered businesses with a taxable turnover above the VAT threshold will be required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.

However, the exception to this is a small minority of VAT-registered businesses with more complex requirements. HMRC has decided to delay mandation for these customers until 1 October 2019 to ensure there is sufficient time to test the service with them in the pilot before they are required to join. You can get more information on this via the website.


The pilot
HMRC reports that over 3,500 businesses are now using the MTDfV pilot. However, there are about 1.2 million businesses mandated to use MTDfV from April 2019.

You may qualify to sign up for the pilot now if you are a sole trader, a partnership, part of a VAT Group, or currently submit the VAT Return for a limited company. Once signed up you will need to start then using Making Tax Digital compatible software to provide your VAT Returns.


Who is not eligible for the pilot?
You will not be able to take part in the pilot at the moment if you:

  • are part of a VAT Division
  • are based overseas
  • are a trust
  • are a not for profit organisation that is not set up as a company
  • submit annual returns
  • make VAT payments on account

Also, if you pay your VAT by Direct Debit, you won’t be able to sign up in the 15 working days leading up to your submission date and the 5 working days immediately after it.

HMRC plan to open the pilot up to more businesses, and you can check for updates here.


Should you sign up for the pilot?
It is crucial to not sign up to the pilot unless you are ready. This means that you have MTD-enabled software in place and you’re currently up to date with your VAT returns.

If you join the pilot, you need to stop filing VAT returns the old way. To use the pilot, you must have MTD software and file digitally through HMRC’s MTD system.

You can still choose to get your agent to submit your VAT Returns and view your next VAT Return deadline in your Business Tax Account.


Further information
If you found this information useful you may also want to check out the following:

Avoid the mad march rush – get a head start on your tax planning
7 ways to prepare your business for 2019
How does the 2018 Autumn Budget affect businesses?

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