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.
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.
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.