On 16 October HMRC announced that it has begun a new pilot scheme in connection with the Making Tax Digital (MTD) programme. The online value added tax (VAT) pilot will include around half a million businesses in the UK.
This follows the first pilot of MTD for VAT launched in April 2018 involving a small number of invited businesses. HMRC considered that the process was successfully tested by that pilot and has therefore opened it up to sole traders and companies whose VAT affairs are up to date.
When MTD for VAT fully begins operation from April 2019 around one million businesses registered for VAT with a taxable turnover above GBP 85,000 will need to keep digital VAT records. These businesses will generally be required to submit records and file returns using MTD-compatible software.
A small number of businesses with more complex requirements will be given a further six months to prepare for MTD. HMRC claims that MTD for VAT will allow businesses to better manage their tax affairs online and save compliance time.
