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HMRC begins writing to businesses alerting them to Making Tax Digital for VAT – ICAEW News

Although ICAEW and the other professional bodies have been making members aware of Making Tax Digital (MTD) and its impact on how businesses keep their accounting records and file their VAT returns, neither HMRC nor the government has done very much at all to make businesses themselves aware of what they need to do.

The publicity campaign is about to begin.

HMRC has advised us that it will shortly start issuing letters to 200,000 businesses that are currently eligible to join the MTD VAT pilot.

The first 20,000 such letters are expected to start arriving on Thursday 8 November, after which there will be a pause while HMRC monitors the impact of the letters before restarting the following week. We will keep you informed of progress.

HMRC has also told us that it is testing the effectiveness of the information campaign by using two different letters in the first wave. It has already been noted that the second letter in particular is misleading as it doesn’t explain that if you sign up and do not have MTD software you cannot file your VAT return.

The letters are reproduced below. HMRC has said:

“We are also taking this opportunity to monitor the effectiveness of our letter content so have created two, slightly different, versions of the letter.

“Which version a customer receives will be selected at random to ensure the results can be assessed impartially.”

Encouragement letters – version 1
The way you send us VAT information is changing – find out what it means for you

We are changing how businesses need to keep their VAT records and submit their VAT returns. This new service is known as Making Tax Digital. If you are a VAT registered business with annual taxable turnover above the VAT threshold (currently £85,000) you will need to use this service to report your VAT. This will be mandatory for periods starting on or after 1 April 2019, but you can make the switch now by following the guidance below.

To use this service you will need to keep digital records. This may mean using software designed for record-keeping or a combination of software packages or spreadsheets. You will then need to submit your return using software that works with Making Tax Digital.

By joining early you will know that your business is ready, but there are other benefits too. Going digital makes managing business finances easier. It can do this by making tax part of your day-to-day record-keeping in a way that will give you the confidence you’ve got things right. Once your software is set up and your VAT return is ready, it just takes the click of a button to send it to us.

What you need to do

To join the new service you can either:

talk to your accountant about Making Tax Digital and joining, if you have one

go to and search for ‘MTD ready’ then click on the first link – this will tell you about the steps you need to take and give you the option to join

If you already use software to keep your VAT records, you need to make sure it has been updated to work with Making Tax Digital before you join.

If you need help, the link above includes short YouTube videos and help to find the best software for your needs. The pages also have links to the ways you can contact us to talk about Making Tax Digital.

Encouragement letters – Version 2
We are modernising the VAT system – get your business ready now

For accounting periods starting on or after 1 April 2019, VAT registered businesses with an annual taxable turnover above the VAT threshold of £85,000 must:

keep digital records for all VAT transactions

use software to submit VAT returns to us digitally

We call this Making Tax Digital. If your business is VAT registered and has an annual taxable turnover above the VAT threshold, you should act now to get ready for this change.

What you need to do

To get your business ready, you must:

talk to your accountant, if you have one, about signing up to Making Tax Digital

go to, search for ‘MTD Now’ and click on the first link to sign up


start using software to keep VAT records, if you don’t already

ask your software supplier if the software you already use is ready for Making Tax Digital

Sign up now to be certain that your business meets the new requirements. Once your software is set up, you can send your VAT returns to us with just the click of a button.

As always, if you have any queries relating to this, or any other subject, please do not hesitate to contact us, by any of the usual channels.

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