HM Revenue & Customs (HMRC) has finally issued a new notice on Making Tax Digital for VAT in which it has clarified many of the questions that businesses had.
VAT notice 700/22: Making Tax Digital for VAT has been created to act as a point-by-point guide to the new regime and includes new advice from HMRC to help fill the gaps where the policy has previously been unclear.
Within the document, HMRC confirms that VAT-registered businesses with annual VATable turnover under the VAT registration threshold (currently £85,000) do not have to comply with MTD, but can voluntarily sign up by informing the tax authority in writing.
Exemptions will also be offered to businesses on the grounds of religion, insolvency, or because it is not reasonably practicable to use digital tools.
Exempt companies will have to contact the general VAT helpline to ask HMRC to approve the exemption or seek “digital assistance”.
While the information reported to HMRC essentially remains the same, the requirement for maintaining recordings is new.
HMRC has also announced that it has seen demonstrations of various MTD software and tested online accounting products within the HMRC test environment. It has produced a list of tested software, although it is likely that additional providers will be added to this list at a later date.
The VAT notice confirms that the full MTD service won’t be available from HMRC when MTD for VAT goes live in April 2019.
This will mean that businesses won’t be able to submit voluntary updates or supplementary data to support their VAT return initially, although these will be added at a later date.
Link: VAT notice 700/22: Making Tax Digital for VAT