Making Tax Digital for VAT – final preparations

With just seven weeks to go before Making Tax Digital (MTD) is introduced most VAT registered businesses need to be making their final preparations.

Deferred businesses

If you must join MTD you should have received a reminder letter from HMRC.  The businesses listed below do not need to join MTD until the start of first VAT period beginning after 1 October 2019.

  • VAT groups
  • Businesses with separately registered divisions
  • Trusts
  • Unincorporated clubs and not for profit organisations
  • Certain Government departments, including NHS Trusts
  • Local authorities
  • Traders based overseas
  • Traders making payments on account
  • Traders in annual accounting

If your business is in one of these categories you should have received a letter confirming that the introduction of MTD is deferred for your business.  If you have not received a letter you must contact HMRC.  If you have received a deferral letter and are not in one of these categories you should also contact HMRC.

All other businesses

If you are already registered for VAT because your “taxable turnover” exceeds the deregistration threshold (also called compulsory registration) you must keep digital records from the start of the first VAT period beginning after 1 April 2019.  If your business is not currently registered but becomes liable to registration by exceeding the registration threshold you will have to join MTD.

Joining MTD

You must apply to join MTD, you will not be automatically transferred.  Once you join MTD you cannot use the HMRC portal to submit VAT returns, any figures entered on the portal will not be received by HMRC.  You must submit all future VAT returns by MTD

This means that you must be ready to submit all VAT returns by MTD before you apply.  If you are ready to join MTD you may have to delay the application slightly if you need to submit the last return prepared pre-MTD via the HMRC portal.  However, you should still be keeping digital records from the correct date.

If you pay your VAT by direct debit you must apply to join MTD at least 15 working days before the due date of the first MTD return, or at least 5 working days after.  In other cases you must apply at least 3 working days before the due date of the first MTD return.

If you would prefer your accountant to submit the VAT returns on your behalf you need to discuss this with your accountant well before the first MTD return is due.