The launch of Making Tax Digital is only a few months away – but are you eligible to delay your start date?

28th January 2019

Despite concerns that many small businesses will not be prepared for the launch of Making Tax Digital (MTD) this April, HMRC has pushed ahead with the roll out of the scheme. However, there are certain circumstances that mean you or your business may be entitled to an extension on your start date or, in some situations, be wholly exempt from the scheme. 

Who needs to comply from April 2019?

For the first phase, if your taxable turnover in the 12 months prior to your potential MTD start date exceeds £85,000 and you are registered for VAT you must comply. You can voluntarily enter MTD if you are VAT registered and your level of turnover is below the VAT registration threshold.

For the avoidance of doubt, taxable turnover includes:

  • income from sales made within the UK and will include income where VAT is charged at the standard rate, the reduced rate or the zero rate of VAT. 
  • the value of services received from overseas businesses that are subject to VAT in the UK.
  • any supplies subject to the domestic reverse charge.

Taxable turnover does not include exempt supplies or income from the sales which are outside the scope of VAT or where services are supplied outside the UK.

Can you delay the start date for MTD for VAT compliance?

HMRC has extended the deadline by six months for a number of taxpayers whose arrangements are considered to be more complex in nature and these are categorised as follows:

  • Trusts
  • ‘Not for profit’ organisations that are not companies (this includes some charities)
  • Companies that are VAT registered in divisions or within a VAT group
  • public sector entities that are required to provide additional information alongside their VAT return (such as Government departments and NHS Trusts)
  • local authorities and public corporations
  • traders based overseas
  • those required to make payments on account
  • annual accounting scheme users

If you fall into one of these categories but otherwise fit the criteria to comply with the MTD regime, then you have until your first complete VAT return period occurring after 1 October 2019 to do so.

Could you be exempt from complying with MTD?

There are a number of exemptions which include taxpayers who cannot use computers or software for reasons of:

  • Religion
  • Disability
  • Age
  • Remoteness of Location

If this is something that you feel will apply to you, then please get in touch as it will be necessary to confirm in writing with HMRC that you are not required to enter the MTD regime.

If you would like to talk through your specific situation, then please contact your usual Harrison Beale and Owen contact or contact Jessica Mason on 02476 306029