Making VAT Digital delay announced

In a surprise move, the Making VAT Digital regime which is meant to start on 1 April 2019 has been delayed until 1 October 2019 for trusts, charities and other larger and more complex entities. For all others it remains 1 April.

VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.

However, in recognition of the complexities of forcing all VAT-registered organisations to do this, the government is delaying mandation for certain groups.

The 6-month deferral applies to entities which fall into one of the following categories:

• trusts
• ‘not for profit’ organisations that are not set up as a company
• VAT divisions
• VAT groups
• those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
• local authorities
• public corporations
• traders based overseas
• those required to make payments on account
• annual accounting scheme users

Pilot now open

In addition to the announcement about the delay, HM Revenue & Customs (HMRC) has opened its pilot service for Making Tax Digital to around half a million businesses.

The pilot is open to sole traders and companies (except those which are part of a VAT group or VAT Division) provided they are up to date with their VAT.

Those who trade with the EU, are based overseas, submit annually, make payments on account, use the VAT Flat Rate Scheme, and those newly registered for VAT that have not previously submitted a VAT return, are unable to join at this point.

Those customers with a default surcharge within the last 24 months will be able to join the pilot by the end of October 2018.

In order to use the pilot, organisations need the right software that is capable of interfacing with the Government Gateway. HMRC has provided a list of compatible software including: Quickbooks, Xero, and Sage 50.

Those who are worried that their software will not be up to date before 1 April 2019 should contact their providers as soon as possible.

Bishop Fleming has a team of Making VAT Digital specialists that can help you to have the right software in place ready for the new regime.