HMRC steps up MTD letter campaign

HMRC has issued another 180,000 letters, following on from the 20,000 sent last week, to businesses affected by Making Tax Digital (MTD) for VAT, explaining the change and what they need to do to prepare for April 2019

During the week beginning 5 November 2018, HMRC sent out its first wave of letters targeted at businesses within the scope of MTD and eligible to join the pilot. Two versions of the letters exist in order that HMRC can monitor their impact. The first explains to businesses that the way they keep VAT records and submit returns to HMRC is changing as a consequence of MTD. It provides an explanation of which businesses will be mandated to use the service from April 2019 and provides and overview of keeping digital records and using software to submit VAT returns.

The second, shorter version, was issued on the week commencing 12 November 2018 and explains that the VAT return system is being modernised and which businesses are within its scope from April 2019. It provides advice on how a business can prepare for the change, with links to help and advice on gov.uk. Up to 1.2m businesses which have taxable turnover above the threshold are expected to be affected by the change.

Darren Jasper, head of cloud accounting at PKF Francis Clark, said: 'This is a positive step from HMRC. We have been planning for MTD and communicating to clients on it for the past 18 months or so, but have been held back by delays with the pilot and HMRC’s reluctance to communicate to business. Now both aspects appear to be resolved we look forward to assisting an even greater number of businesses towards compliance.'

HMRC has recently been criticised for failing to provide adequate information to businesses on MTD. The chair of the House of Lords economic affairs finance bill sub-committee, Lord Forsyth, summarised the evidence that had been presented to it by saying that businesses were largely underprepared for MTD and ‘the message we have had from small businesses and practitioners is that those businesses are not aware of what is required from them’.

An HMRC spokesperson said: ‘We have been promoting MTD and engaging with businesses and their representatives since it was first announced. The public pilot is now open and we are increasing our communications activity, including contacting all businesses within scope of MTD for VAT directly, to ensure they know about the changes and how to prepare.’

Report by James Bunney

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