HMRC have started issuing reminder letters to businesses who they believe may be required to sign up for Making Tax Digital (MTD) and have not done so.
We have received a number of queries from businesses with taxable turnover below the VAT registration threshold who were concerned that the letters/e-mail were an instruction from HMRC to register for MTD.
This is an important reminder that only businesses with a taxable turnover above the VAT registration threshold (£85,000) are mandated for MTD for VAT return periods starting after 01 April 2019 (or 01 October 2019 if in the deferral group – see below).
If you receive a reminder letter from HMRC and your taxable turnover is below the VAT registration threshold, then HMRC’s letter states that you can ignore the e-mail/letter.
Businesses need to carefully consider whether they are mandated to register for MTD and that they do not following receipt of the letter from HMRC mistakenly/inadvertently voluntarily register themselves for MTD unnecessarily where not mandated.
An example of an email sent from HMRC is shown below:
Have you received your MTD deferral letter from HMRC? If not, you must act now to benefit from deferral
HMRC announced in October 2018 that for certain VAT registered businesses with more complex MTD requirements HMRC would be deferring mandating MTD for a further 6 months .i.e. for those business within the deferral group MTD would be mandated from to first VAT accounting period starting on or after 1 October 2019.
We are aware that some businesses which fall into the deferral group have still not received confirmation from HMRC that they have been deferred, and a number of MTD deferral letters have not been issued by HMRC in error.
It is important that any businesses which falls into one of the categories below which has not yet registered for MTD and wishes to take advantage of the deferral and which has not received a formal deferral letter from HMRC contact the HMRC VAT Helpline on 0300 200 370 to request a deferral letter as a priority.
HMRC MTD deferral letters have legal force and therefore any business wishing to rely on the deferral must have a formal deferral letter from HMRC for the deferral to apply.
Who does deferral apply to?
Deferral applies to businesses that fall into one of the following categories:
- ‘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 (such as government departments and NHS trusts);
- local authorities;
- public corporations;
- traders based overseas;
- businesses required to make payment on account; and
- annual accounting scheme users.