Does MTD apply to you?

The first thing you need to do is to find out if MTD applies to you…So, let’s get started.

Does MTD apply to you ?

MTD for VAT is compulsory for VAT-registered businesses with turnover above the current VAT registration threshold of £85,000, which has been frozen until 1 April 2020.

From the start of their first VAT return period or after 1 April 2019, VAT-registered businesses with turnover above the VAT registration threshold will need to comply with the digital record-keeping and reporting requirements of MTD for VAT.

VAT-registered businesses whose turnover is below the VAT registration threshold will be able to choose whether to join MTD for VAT.

Once within the scheme, a business must remain in it while they are VAT-registered, even if their turnover falls below the VAT registration threshold.

Where turnover is above the VAT-registration threshold on 1 April 2019, the start date will depend on how the VAT quarters fall. This is illustrated in the following table:

VAT return quartersMTD start date
Ending 31 March, 30 June, 30 September, 31 December1 April 2019
Ending 30 April, 31 July, 31 October, 31 January1 May 2019
Ending 31 May, 31 August, 30 November, 28 February1 June 2019

Where turnover is below the VAT-registration threshold (and the business has not opted in to MTD for VAT), the business should check its turnover at the end of each month.

If in the previous 12 months it’s more than the VAT-registration threshold applying on the first day of the following month, it should start to apply the MTD for VAT rules from the start of its next VAT accounting period.

Exemptions

There are very few exemptions for MTD for VAT. If any of the following exemptions apply to your business, HMRC advise you to contact the VAT Helpline on 0300 200 3700.

  • Religious societies

The business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of MTD for VAT. This could be where their beliefs prevent them from using computers.

  • Not practical

An exemption may apply where it’s not reasonably practical to use digital tools to keep business records or to submit returns for reasons of age, disability, remoteness of location or for any other reason.

  • Insolvency

If an insolvency procedure is in place, an exemption from MTD for VAT may be granted.

 

Watch the following video about how Making Tax Digital for VAT affects your business.

Further videos and webinars for can be found on the Governments website