MTD for VAT is being phased in as part of a government strategy which will ultimately
require taxpayers to move to a fully digital tax system.
Under the MTD rules, businesses with a turnover above the VAT threshold (£85,000)
must keep digital records for VAT purposes and provide their VAT return information to
HMRC using MTD functional compatible software. The rules generally have effect
from 1 April 2019, where a taxpayer has a ‘prescribed accounting period’ which began on that date, and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019. The exception to this is a small minority of VAT-registered businesses with more complex requirements who will not be mandated to comply with MTD for VAT until 1 October 2019.
The six month deferral applies to businesses who 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 and annual accounting scheme users.
Businesses below the VAT threshold which have voluntarily registered for VAT can opt to
join the scheme.
As with online VAT filing, there are some exemptions from MTD for VAT. However, the
exemption categories are tightly-drawn and are unlikely to be applicable to most VAT
We can help you to meet your MTD for VAT obligations – please contact us to find out more.