HMRC has recently published a short ‘MTD – Mythbusters’ document which you find useful to have a quick look at. In terms of busting a few MTD myths, and providing some extra scraps of new information, the webinar from the Chartered Institute of Taxation and HMRC last week was very useful.

New or reinforced information picked up from this session included:

• HMRC will be launching an MTD ‘software choices viewer’ at the beginning of March through which you can select potential MTD software based on criteria you input to it e.g. whether you are an agent or a business, the cost, whether you want bridging software or something more than this etc. HMRC intends to add more criteria, but there is no timescale on this at present.

• If you submit VAT returns for other members of your corporate group (not in your VAT group), you may need to register for an ‘Agents Services Account’ and add the companies to this individually and then register for MTD (although this was mentioned as something you may possibly need to do, not definitely need to do – certainly worth following up on though if you are in this position).

• It is very important to consider the timing of when exactly to sign up for MTD – this is especially important in relation to the timing of direct debits.

• HMRC will take a ‘fairly soft approach’ to record-keeping penalties where businesses are clearly trying to get it right, but if a business is making no effort then HMRC will ‘come down hard’ on penalties. (The soft approach to penalties does NOT extend to the default surcharge regime for the late submission or payment of VAT returns).

• 1 April is not a ‘sign up deadline’ – you need to be signed up to MTD in time to submit your first mandated return (but you’ll need to be keeping digital records from the start of that return period) – this will be the end of the first quarter starting on or after 1 April.

• If you are entitled to the deferment you must have confirmation from HMRC – if you have not received this contact your Customer Compliance Manager (CCM) or the VAT helpline. ALL deferment letters have been issued. HMRC can issue a duplicate if this has been sent out but not received.

• If you received a deferral letter but don’t think you should have, HMRC will not be withdrawing these letters.

We are very grateful to Amanda Darley, Tax Specialist, at British Universities Finance Directors Group (BUFDG) for preparing this helpful update and for allowing it to be reproduced on the CTG website.

Charities can access a range of resources on Making Tax Digital on CTG’s website here.

HMRC has also published Making Tax Digital Update for Agents issue 4, which is worth a read for charities and agents alike. The update includes the important reminder that MTD applies to VAT periods starting on, or after, 1 April 2019. Any VAT periods already started, that cover 1 April, should be compiled and submitted under existing methods. As outlined in Amanda’s update, charities should plan ahead when making the switch to MTD (particualrly where payments are made by direct debit) and make sure they are ready to do so.

HMRC has also updated VAT Notice 700/22 to cover exemptions from MTD and included an outline of the process for application. The relevant part of the Notice is Section 3. HMRC has also included some examples of businesses who are exempt.