HMRC has announced that The Making Tax Digital (MTD) for VAT pilot has now moved into its public beta phase.

This significant development means any business which meets the eligibility criteria and has acquired MTD compliant software ( like MTDfVAT) can now join the public pilot and get a head-start with MTD for VAT compliance.

Time is of the essence as, from 1 April 2019, the bulk of VAT-registered businesses with a taxable turnover above the VAT threshold currently at £85,000, will need to do the following:

  • keep and store their VAT records digitally
  • submit their VAT returns to HMRC using MTD-compatible software or an API enabled spreadsheet.</li?>

Deferred mandation for those with complex VAT arrangements

HMRC has also announced a deferred MTD for VAT mandation date some businesses with more complex VAT arrangements. Roughly 3.5% of VAT-registered entities will now be mandated into MTD for VAT from 1st October 2019 instead.

These complex organisations include: trusts, not-for-profit organisations that are not companies (including some charities), VAT divisions, VAT groups, those public sector entities required to provide additional information alongside their VAT return (such as government departments and NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual returns.

Eligibility for the public pilot

Approximately 600,000 of the 1.1m businesses required to comply with the MTD for VAT regulations from 1st April 2019 are now eligible to join the public pilot. The eligibility criteria are expected to be relaxed as the public pilot progresses, HMRC is yet to release a timetable for the businesses listed below.

Pilot exclusions

The businesses and organisations who cannot join the pilot yet, include:

  • trusts or charities
  • those part of a VAT group or VAT Division
  • those who trade with the EU
  • those based overseas
  • partnerships
  • those who submit annual returns
  • those who make VAT payments on account
  • those who use the VAT Flat Rate Scheme
  • businesses newly registered for VAT and who have not previously used their VAT online account to submit their VAT Return
  • those who have incurred a default surcharge in the last 24 months

NB: businesses who pay their VAT by direct debit cannot sign up during the 15 days leading up to the submission date.

Software suppliers supporting MTD for VAT

HMRC has also published a more defined list of software suppliers (MTDfVAT are included) who are now ready and approved for sending MTD for VAT returns and income tax updates. The MTDfVAT team are delighted to feature in the list.

Additional guidance

HMRC has also published additional MTD for VAT guidance in the form of:

MTDfVAT is MTD-Ready for you:

We have already worked with many businesses and accountancy practices on HMRC’s private beta, to help prepare for MTD and successfully submit VAT returns!

We’re here to answer your questions, as we have already answered quite a few, can help you along the way. Contact the support team now on Tel: 0330 058 0900