In June, HMRC announced that certain entities would be granted a further deferral of the commencement date for MTD for VAT (beyond October 2019).
All businesses that are required to be VAT-registered (because their income exceeds the VAT threshold) are affected by Making Tax Digital (MTD), HMRC’s new scheme. For many businesses, the MTD regime has already begun: businesses deemed ‘non-complex’ are required to submit VAT returns via MTD-compatible software for periods beginning on (or after) 1st April 2019. Certain entities, however, have been granted a deferral – more details of which we’ll discuss below.
MTD for VAT: Deferrals and Exceptions
As mentioned above, it has been a requirement for many VAT-registered businesses to adhere to the MTD regime since April 1st 2019. The exception to this rule, which HMRC announced in October 2018, was for ‘complex businesses’: such businesses were given a deferred start date (originally October 2019), which they were notified of via post.
Among the entities that were initially given a deferred start date were NHS trusts and government departments. These types of organisations are required to submit additional information with their VAT return, which they administrate through a special system named GIANT (Government Information and NHS Trust). However, in June, it was confirmed that entities using the GIANT system would be given an extension beyond October 1st 2019. The date has not been announced, but all affected entities should have received a letter from HMRC.
The reasons behind this move have not been fully explained: it has been confirmed that a deferral is needed due to the potential reform of the VAT refund rules following a policy paper on the topic (which was expected soon after the Spring Statement but which, as of yet, has not been published). Nonetheless, a revised timetable for MTD should be published later this summer and all affected parties will receive details from HMRC in due course.
MTD for VAT: What You Need to Do Now
For many organisations, MTD for VAT is well underway: indeed, it has been reported that over 300,000 businesses have signed up for MTD, and over 180,000 VAT returns have already been submitted via MTD-compatible software.
However, it is crucial that businesses prepare properly for the transition. The HMRC helpdesk is struggling to keep up with the number of MTD-related queries, and taxpayers are experiencing long delays when trying to contact the official helplines. Though HMRC are trying to make improvements to their support model, it is recommended that affected parties seek guidance from a qualified tax adviser and allow plenty of time to adapt to any new MTD systems.
With this in mind, we’ve compiled a brief checklist for organisations to follow when preparing for MTD:
- Analyse your existing systems and the journey of financial information. Be aware that, though this may not be required for the 2019 MTD deadlines, transfers from non-API enabled spreadsheets will not be acceptable by 2020. It would be worth reforming your existing systems as a whole rather than waiting for the 2020 cut-off.
- Review your existing software: is it MTD-compatible?
- Ensure you are fully apprised of the data reporting requirements: there are very specific requirements for MTDfV, and these may not be captured by your current systems.
- If you have been granted a deferral, ensure that all key stakeholders are aware of your MTDfV deadline (particularly if this is subject to change).
MTD for VAT: How We Can Help
Most businesses will be expected to adhere to MTD on a broader scale by 2020 – so, even if you are not affected by MTDfV, it is essential that you begin to consider the wider implications now.
IBISS & CO are here to help. Our expert team of tax advisers and accountants will ensure a smooth transition, designing bespoke solutions that will facilitate a smooth transition and avoid business disruption. Contact us today to find out how we can help you stay ahead of the curve.