Unless you have been ignoring our publications and social media posts, you should be aware that from April 2019 just over 1 million businesses who are registered for VAT with taxable turnover above £85,000 will need to maintain their VAT records digitally. VAT returns will also need to be submitted directly from compatible software.
If your business is eager to get involved you may not need to wait much longer! HMRC have announced in the past few days that the pilot scheme is now open for those with the simplest affairs. HMRC estimates that this covers around 500,000 businesses.
HMRC have defined ‘simple’ as being sole traders and companies who are up to date with their VAT affairs. They have however specifically excluded certain businesses as follows:
- Members of a VAT group/division
- Businesses trading with the EU
- Businesses based overseas
- Members of annual schemes
- Members of Flat Rate schemes
- Those who make payments on account
- Those newly registered for VAT
Testing will be commencing shortly for Partnerships and certain categories noted above such as Flat Rate Schemes and those trading with the EU. If testing is successful these businesses are likely to be admitted into the pilot scheme by early 2019 along with newly registered businesses.
A further deferral?
Latest news from HMRC also clarifies that those with more complex filing requirements have an additional 6 months to prepare, providing much needed time to get this right for the small group affected. These businesses will not need to comply with Making Tax Digital (MTD) until October 2019.
“Another deferral” we hear you say, but don’t get too excited, HMRC expect their definition of ‘complex’ to only apply to around 3.5% cases.
Those specific businesses which will obtain a 6 month deferral are noted as follows:
- VAT groups
- Unincorporated ‘not for profit’ organisations
- Public sector entities who submit additional information with their return (eg. NHS Trusts or Government departments)
- Local authorities
- Public corporations
- Those traders based overseas
- Those required to make payments on account
- Members of annual schemes.
With less than 6 months to go and no direct communication between HMRC and affected businesses you will have to take our word for it! We understand letters still feature in the plan and should be issued soon but don’t wait to receive yours, get in touch today and we will get a plan in place for you to ensure you are MTD ready.