HMRC have started sending letters to affected businesses in preparation for MTD for VAT from April 2019.
Making Tax Digital (MTD) for VAT becomes mandatory for many businesses for VAT periods starting on or after 1 April 2019. In preparation for this, HMRC have started sending letters to affected businesses this week. At this point HMRC are only contacting businesses that are already eligible to join the pilot (generally smaller, simpler businesses) and expect to send around 200,000 letters in total, of which 20,000 have been sent this week. HMRC are describing these communications as ‘encouragement letters’ and one of their main aims appears to be to persuade this group of businesses to sign up to MTD VAT in advance of it becoming mandatory in April. It is not yet clear when remaining businesses will be contacted, in particular those larger and more complex taxpayers who qualify for the recently announced six month deferral.
As mentioned in the 19 October 2018 edition of Tax Matters Digest, HMRC recently published a revised timeline for when businesses can join the pilot as well as a six month deferral of the mandatory start date for “businesses with more complex requirements”.
There has been some criticism of the lack of direct communication from HMRC to taxpayers to inform them of their obligations and the timeline and these letters go some way to address these concerns. However, given we are now less than five months from the mandatory start date, it is hoped that the remaining businesses in scope will be contacted by HMRC shortly. In particular, businesses who potentially qualify for the six month deferral will be looking for confirmation of this as the description of the qualification criteria provided by HMRC has created a number of areas of uncertainty and we understand more guidance is likely to be published.
If you would like advice on your own preparations for MTD or details of KPMG in the UK’s technology solutions, please speak to your usual contact.