HMRC Opens Pilot Phase for MTD VAT filers

The tax authority HM Revenue & Customs (HMRC) has invited more than half a million businesses to test Making Tax Digital (MTD) for VAT moving forward to the digitisation of tax which will be effective from April 2019. HMRC has released a new statement on 16th Oct 2018 relating to MTD for VAT filers.

In the statement, HMRC mentioned the launch of a pilot for a new online VAT service as a step ahead towards making tax digital development.

Mel Stride MP, Financial Secretary to the Treasury, stated, “HMRC is transforming the tax administration so that it’s more effective, more efficient and easier for taxpayers. Today’s announcement means that around half a million businesses can join MTD and start filing their VAT returns online making it easier to get their tax right the first time.”

“More and more businesses use digital tools every day to help them operate – tax shouldn’t be different. This is a major step towards bringing VAT into the 21st century.”

The pilot phase opened on 16th Oct 2018 for sole traders and limited companies whose affairs are up to date and straightforward and will commence for the other companies in the upcoming months.

Entities in the following category will not be able to take part in the pilot at the moment:

  • submit annual returns
  • make VAT payments on account
  • use the VAT Flat Rate Scheme
  • have incurred a default surcharge in the last 24 months
  • are a business that is newly registered for VAT and you have not previously used your VAT online account to submit your VAT Return
  • trade with the EU
  • are a partnership
  • are part of a VAT group or VAT Division
  • a trust or charity
  • are based overseas

However, it is expected that HMRC will include them in the pilot gradually.

HMRC has further deffered the mandate to 1st October 2019 from 1st April 2019  for around 3.5% of the total VAT registered entities after considering the concerns from businesses who have complex accounts and provided them with a breathing period of six months to prepare their accounts and testing of services with HMRC before they are necessitated to join.

To join the pilot, entities or individuals will need to work with software providers who are capable of interfacing with the HMRC Gateway. HMRC has provided a list of software providers on their website. Once the software is selected, companies require the Government Gateway user ID and password used to submit their VAT returns online, along with their existing VAT registration number.

HMRC has advised eligible businesses and agents not to wait for the preparations till last minute and encouraged them to get access to the pilot as early as possible.

DataTracks, HMRC-recognised software providers supporting Making Tax Digital (MTD) for VAT leverages easy filing of VAT with HMRC. Concurrent with the digitisation process by HMRC, our team of experts have developed unprecedented bridging software connecting API’s provided by the regulator for fetching details and smooth VAT filing.

DataTracks can help you check with HMRC on your business eligibility to participate in the pilot. If you are eligible try the DataTracks MTD application for the pilot and we will be happy to help you transition into Making Tax Digital before the April 2019 mandate.

Further information about the pilot and MTD guidance can be found below:

Guidance: Use software to submit your VAT Returns

Guidance: Agents: use software to submit VAT Returns

Guidance: Update your clients’ business details if they’re part of the Making Tax Digital for VAT pilot

Guidance: Find software suppliers for sending VAT Returns and Income Tax updates