More than half a million businesses are now able to test out digital tax reporting for VAT, after HMRC extended its Making Tax Digital (MTD) for VAT pilot scheme to sole traders and companies.
From 1 April 2019, VAT-registered businesses with a taxable turnover of more than £85,000 will be required to keep digital VAT records and file their returns using compatible software.
The MTD for VAT pilot was launched in April 2018 to invited businesses only, but has now been extended to sole traders and companies whose VAT affairs are up to date and straightforward.
The pilot will extend to most other business types in the coming months, such as those who trade with the EU, are based overseas, submit annually, make payments on account, use the VAT flat-rate scheme, or are new to VAT.
HMRC also announced a six-month extension to the MTD deadline for the 3.5% of VAT-registered entities with more complex requirements.
Those businesses will now have until 1 October 2019 to comply with digital VAT reporting requirements.
Mel Stride, financial secretary to the Treasury, said:
“Around half a million businesses will be able to start filing their VAT returns online, making it easier to get their tax right first time.
“More and more businesses use digital tools every day to help them operate – tax shouldn’t be different. This is a major step towards bringing VAT into the 21st century.”
We can help you prepare for MTD.