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MTD pilot

HMRC extends MTD for VAT pilot scheme to VAT groups

Elizabeth Wilson 17 January 2019 No comments

HMRC has extended its Making Tax Digital for VAT (MTD for VAT) pilot scheme to VAT groups, as well as to all businesses that are mandated to join MTD for VAT from April 2019.

VAT groups are the first type of business from the minority of businesses that are mandated to join MTD for VAT from October 2019.

Background to MTD for VAT

MTD for VAT is set to come into effect from 1 April 2019. Businesses with a taxable turnover above the VAT registration threshold of £85,000 will be required to submit VAT returns to HMRC via an Application Programming Interface (API) and to keep VAT records digitally. (See our previous blog article for further information).

For most VAT registered businesses this applies to accounting periods starting on or after 1 April 2019, although a six-month deferral was announced in November 2018 for a small group of businesses with more complex requirements, including VAT Groups, VAT divisions and trusts.

MTD for VAT pilot

The pilot scheme allows HMRC to monitor the system under greater volumes, as well as giving businesses an opportunity to test their systems, address teething issues and train staff ahead of the formal April MTD roll-out.

The pilot was first launched in April 2018 to a select number of invited VAT businesses and their agents. In October 2018 it was extended to half a million UK businesses, including sole traders and the majority of companies up to date with their VAT affairs.

However, until now it has not been available to partnerships, businesses that are part of a VAT group, or businesses that trade with the EU. These are now eligible to enter the pilot.

Commenting on the pilot scheme, HMRC’s Clare Sheehan, head of customer readiness for MTD, said:

“The MTD pilot is now available to all businesses who will need to use the service from April. This marks a significant milestone towards our delivery of a modern tax administration.

We encourage all eligible businesses to join and try out the service before they are mandated to use it.”

Paul Aplin, ICAEW president commented:

“Some businesses, such as companies which are members of a group, will not be required to use the new service until October. We are pleased that from today, the pilot is also extended to VAT groups, which will give them longer to adapt to the new processes.”

A minority of businesses with special VAT requirements remain excluded, including those that are part of a VAT division and trusts (see the Gov.uk website here for full details). HMRC will continue to develop the system’s functionality to allow other types of taxpayer to join the pilot in due course.

For further information and help on preparing for MTD for VAT, please get in touch.