The pilot programme for Making Tax Digital (MTD) for VAT has been extended by HMRC to all businesses that meet the requirements, giving those affected time to test their systems and train staff ahead of the April deadline
The extension of the pilot means that VAT registered entities with an annual turnover of £85,000 or more are now able to test their accounting systems ahead of being required to keep a digital record of their VAT transactions from 1 April 2019 onwards.
The pilot, which has been available since April 2018, was opened to 500,000 businesses in October but certain restrictions applied. It was not available to those who were part of a VAT group or VAT division, businesses that traded with the EU, or partnerships. These are now eligible to enter the pilot.
A small number of organisations with special VAT requirements remain excluded, including trusts and local authorities.
According to Brian Palmer, tax policy expert at the Association of Accounting Technicians (AAT), the number of daily sign-ups to the pilot has exceeded 100 as businesses prepare for the April deadline. He welcomed the news, saying: ‘HMRC is rightly urging “as many eligible businesses as possible” to take part in the pilot ahead of the April deadline. It makes perfect sense to do so.
‘Failing to engage with the pilot puts your or your client’s firm at risk of making mistakes or finding you need to change the way you report figures after the deadline, potentially meaning you will be non-compliant.
‘Joining the pilot now means you can check any teething problems with the system and for HMRC themselves to have confidence in the system, and for you to train up all relevant staff without any fear or concern of consequences.’
Clare Sheehan, head of customer readiness for MTD, said: ‘The MTD pilot is now available to all businesses who will need to use the service from April. This marks a significant milestone towards our delivery of a modern tax administration.
‘We encourage all eligible businesses to join and try out the service before they are mandated to use it.’
Paul Aplin, ICAEW president, said: 'Some businesses, such as companies which are members of a group, will not be required to use the new service until October. We are pleased that from today, the pilot is also extended to VAT groups, which will give them longer to adapt to the new processes.
'We remain concerned at the overall lack of awareness about MTD for VAT. ICAEW member firms have been encouraging businesses to prepare and to look at the potential digital technology holds more generally for some time, but the deadline is now looming.
We are concerned that many businesses are still unaware of what they will be required to do. There are currently only 3,500 participants in the pilot and that will need to increase substantially over the next few weeks to ensure that the system is fully tested and that businesses become familiar with the new process.
‘Through at least the first year of MTD, HMRC should adopt a very light touch – one of encouragement rather than compulsion.'
Report by James Bunney