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  • UNITED KINGDOM

    Making Tax Digital - Have you received a letter from HMRC?

UNITED KINGDOM - Making Tax Digital - Have you received a letter from HMRC?

March 2019

As reported in BDO Indirect Tax News Issues 2/2018 and 4/2018, the UK is about to introduce Making Tax Digital for VAT (MTDfV), which will require almost all VAT registered businesses to keep digital records and file their VAT returns via ‘functional compatible software’. MTDfV will be compulsory for entities that are VAT registered in the UK and have an annual taxable turnover exceeding GBP 85,000. More information on MTDfV can be found on the website of BDO in the UK here.

MTDfV is scheduled to come into force for VAT return periods beginning on or after 1 April 2019 for most UK businesses. However, HMRC, the UK tax authority, has deferred mandatory use of MTDfV by certain organisations with ‘more complex’ VAT requirements to 1 October 2019. This deferred category includes overseas businesses which are UK VAT registered but do not have an establishment in the UK.

HMRC, the UK tax authority, has since written to all ‘complex’ businesses to officially notify them that their requirement to file VAT returns has been postponed until October 2019. This letter includes a specific direction to carry on using the existing UK VAT portal after April 2019. We understand that those who have not received a letter to that effect from HMRC will be obliged to implement MTDfV from 1 April, so it is crucial to check whether HMRC expects your business to start using MTDfV from 1 April or 1 October 2019.

Any business which believes that it should fall into the October 2019 deferral category (see full list below) but has not received a letter should contact HMRC urgently:

  • Overseas businesses which are UK VAT registered but do not have an establishment in the UK
  • Trusts and unincorporated charities
  • Local authorities and some public sector entities, including Government departments and NHS Trusts
  • Public corporations
  • Businesses with one or more of the following VAT profiles:
    • VAT group registration
    • Divisional VAT registration
    • those required to make payments on account
    • those who use the annual accounting scheme.

Martyne Pearson
[email protected]

Mark Ellis
[email protected]