It was rumoured that the Minister for HMRC had to decide this month whether the Making Tax Digital (MTD) project should be stopped, postponed, or go ahead. It seems that decision has been made; Making Tax Digital for VAT will go ahead from April 2019.
However, HMRC still has a lot to do to get its own systems aligned with the data which will flow through a different gateway under Making Tax Digital, so it has introduced a six-month buffer into the MTD timetable.
The following categories of businesses and organisations will have their start date for MTD for VAT deferred until VAT periods beginning on and after 1 October 2019:
- VAT groups
- VAT divisions
- VAT traders based overseas
- Unincorporated charities and similar not for profit organisations
- Certain public sector bodies and local authorities
- Those who use the annual account scheme users
- Companies paying VAT of £2m or more who make VAT payments on account
All other VAT registered traders with annual turnover of £85,000 or more must enter the MTD regime for periods beginning on and after 1 April 2019.
HMRC have also announced that it is inviting 500,000 businesses to join the MTD for VAT pilot. We believe this invitation will be sent by letter to sole-traders and companies who do not fall into one of the categories of deferred starters listed above. If you receive such a letter, you should reminded that you do not have to join MTD until April 2019, and it may be better to wait until the system has been fully tested. Once inside the MTD regime it is very difficult to leave (Basically you will have to de register the business for vat in order to leave)
Partnerships, businesses who use the VAT flat rate scheme, and those who trade with EU countries, won’t be able to join the MTD for VAT pilot until late in 2018 or early 2019.
If you require assistance in getting ready for MTD implementation please do not hesitate to contact us