Apparently HMRC has finally began communicating with businesses about Making Tax Digital (MTD) by sending its first ‘wave’ of 20,000 letters to affected businesses, supposed to be hitting our doormats today!  Another 180,000 letters will be issued next week.

The delay in contacting businesses directly about MTD for VAT has apparently been that HMRC wanted to ensure that the pilot was ready to accept VAT returns from those particular businesses. HMRC managers apparently believe that business owners would be eager to jump straight into the MTD pool without taking time to adjust their accounting systems or to train staff.

Thus, HMRC’s communications policy around MTD is driven by which businesses can access the pilot. As the pilot is opened up to more categories of businesses, those organisations will receive a welcome to MTD letter from HMRC.

The MTD for VAT pilot was initially accessible by invitation only to the simplest businesses: essentially sole-traders. In mid-October the pilot also opened up to single companies, covering up to 600,000 eligible businesses.

All those VAT registered businesses who can now join the pilot and who have annual turnover of £85,000 or more, should shortly receive a letter from HMRC explaining how they can start submitting VAT returns under MTD, and when this will become compulsory for them. Some VAT registered businesses with turnover just below the VAT threshold will also receive the same letter.

Who is outside the pilot?

The following categories of VAT traders can’t join the MTD pilot yet, so won’t receive a MTD welcome letter from HMRC:

  • partnerships
  • trade with the EU
  • in a VAT group
  • VAT division
  • based overseas
  • use VAT flat rate scheme
  • make VAT payments on account
  • newly registered and haven’t submitted a VAT return yet
  • in the surcharge system.

Northumberland Accountants & Tax Advisers Ltd have requested to join the pilot so that we could give better advice to our clients affected by MTD from our own experience.  Sadly, as yet, we have not heard anything from HMRC in this regard.

We shall keep you updated!