Shortly before Christmas, HMRC started to send out “encouragement letters” to businesses within the scope of Making Tax Digital for VAT (MTDfV) and to those who were eligible to join the MTDfV pilot. In total, over a million letters will be sent out before the end of February.
Parliament’s Economic Affairs Committee has warned HMRC that small businesses “could pay a heavy price for the proposed change.” It also stated that HMRC has “failed to adequately support small businesses” ahead of the introduction of MTDfV, set to start from 1 April 2019. The Committee has urged HMRC and the Government to “start listening” to small businesses’ MTDfV concerns.
The legislation affects businesses which have a VAT-able turnover above the current VAT registration threshold of £85,000. Affected firms will need to keep a digital record of their business transactions and submit their VAT returns through third-party software, or spreadsheets, linked to HMRC’s own systems – via an application programming interface (API).
Please contact us for more information about the forthcoming MTDfV and how it may impact on your business.